**Different Types of Sourcing Methods**

Sourcing isn’t simply a matter for procurement teams. With the increasing expectations around ethical and responsible supply chains, who supplies your organization’s goods and services is also a matter of concern for the C-suite.

The sourcing process, which falls under supply chain management, is used for identifying, vetting, and selecting the best suppliers. It’s distinct from the procurement process. Think of it this way: sourcing is the “who” (the suppliers themselves) and procurement is the “what” (goods and services).

**Types of Sourcing**

**Outsourcing:**
Outsourcing involves using a domestic or foreign third-party to carry out an activity or provide goods or services that are typically provided in-house.

**Insourcing:**
Insourcing leverages internal resources, such as a specific person or department, to perform tasks that could have been outsourced or were so before.

**Near-sourcing:**
Near-sourcing, also known as nearshoring, involves moving sourcing activities closer to where goods or services are sold. This can be considered an alternative outsourcing strategy.

**Single sourcing:**
Single sourcing involves choosing only one supplier for all raw materials, goods, and services.

**Global sourcing:**
Global sourcing refers to sourcing goods or services from suppliers in global markets.

**Joint ventures:**
Joint ventures are partnerships between organizations to accomplish a goal.

**Vertical integration:**
Vertical integration is when an organization expands its own supply chain operations rather than outsourcing.

**Captive service operations:**
Captive service operations, or captive centers, are set up by organizations in countries where the business may not yet have a presence.

**Strategic sourcing methods: ethical, responsible and sustainable sourcing:**
Strategic sourcing, specifically, is a procurement strategy that factors in a company’s long-term goals and business objectives when evaluating potential suppliers.

**FAQs**

*Q: What are the different types of sourcing methods?*
A: The different types of sourcing methods include outsourcing, insourcing, near-sourcing, single sourcing, global sourcing, joint ventures, vertical integration, captive service operations, and strategic sourcing methods.

*Q: Why is strategic sourcing important?*
A: Strategic sourcing is important as it factors in a company’s long-term goals and business objectives when evaluating potential suppliers.

*Q: What is the difference between single sourcing and sole sourcing?*
A: Single sourcing is choosing only one supplier for all raw materials, goods, and services, while sole sourcing is a situation where there is only one supplier for a particular product or service, negating the ability for businesses to choose alternatives.

*Q: What is vertical integration?*
A: Vertical integration is when an organization expands its own supply chain operations rather than outsourcing, and it has two directions—backward integration and forward integration.