ABSTRACT
This chapter concerns two important issues in purchasing and supply management: sourcing strategy and supplier relationship management (SRM). Sourcing strategy is often used to imply different things. Leaving the major question of where to source from (local or global sourcing) to Chapter 5, this chapter begins by examining three aspects
of sourcing strategy. First, the structural decision concerning how many suppliers should be used for the purchase of the same, or very similar, items. We evaluate the strategies known as single-sourcing, multi-sourcing and various forms of hybrid sourcing. Second, we examine sourcing decisions that concern the purchase of items that represent different categories and therefore different purchasing and supply management challenges. Purchase categories typically concern different types of product (or service) but in addition to category segmentation it is necessary to consider how items differ in terms of cost (or value) and supply market risk and complexity. Third, we evaluate the question of the type of supplier relationship that is appropriate for different supply situations, in particular, the relevance of partnership sourcing compared with more arm’s-length adversarial sourcing strategies.
