1. Outsourcing
Outsourcing is a strategy to increase efficiency in workplaces. The "outsourcing" strategy, which especially helps reduce costs, is a set of practices in which certain tasks and functions are outsourced to people or companies outside the company. In summary, outsourcing, in which a company hires a third party to perform its task, began to be accepted in the business world in 1989. With the introduction of this concept to the business world, third parties have emerged that provide services previously provided by company. The main purpose of the “outsourcing” strategy, which is frequently used by companies, is to ensure efficient distribution of the workload for more important issues.
2. Insourcing
Insourcing is the process by which a business performs certain functions, tasks or processes using its own internal resources and employees, rather than outsourcing them to outside subcontractors or third parties.
3. Near-sourcing
Near sourcing is a strategy that companies use to lower the supply chain cost. So it is when companies choose to place operations (or outsource to a company) of sourcing, procurement, development, manufacturing, and supply near the end consumer market. Near sourcing reduces the costs associated with the supply chain, like transportation costs.
4. Low-cost country sourcing (LCSS)
Companies decide to do low-cost country sourcing when they try to cut their supply chain expenditure. Here companies source material, labor, and other expertise from countries where these are available at low cost
5. Global sourcing
Companies in today’s digital world find countries where they can source high-quality material, labor, and expertise at low cost. The world is the marketplace. If a company does not find the right quality material domestically, they expand its options to other countries for goods and services. Plus, due to global sourcing, companies also get access to global talents and insights into how businesses run worldwide.
6. Vertical integration
Vertical integration is the process of merging two or more companies located at different production or distribution levels but within the same industry. For instance, a cement processing firm can acquire a limestone mining company to streamline sourcing and procurement management functions. So, when an organization buys out a supplier who supplies resource inputs, that’s called backward integration. And when it acquires enterprises in its distribution line or chain, that’s known as forwarding integration.
7. Single or Multiple Supplier
Single-sourcing: The age-old concept of economies of scale. Single-sourcing is the strategy of passing all purchase orders for a particular product to one supplier. By buying in bulk, consistently, from one single vendor, theoretically, a business can benefit from better costs, quality of service, quality of the product, and payment terms.
Multi-sourcing: As global economies grow more and more advanced, you can make pretty much source any product on any continent. With seemingly infinite production options for most industries, multi-sourcing is a strategy that leverages a large pool of suppliers to satisfy business needs.
8. Joint ventures
Joint ventures are organizations created by two or more parties. These entities are characterized by shared ownership, shared benefits and risks, and shared governance. The purpose of joint ventures is combined efforts and input that target the development of a single project for profit. In procurement management and supply chain processes – joint ventures provide scalability and reduce risks. Organizations can always access similar products from different suppliers, thus eliminating the risk of product understock.
9. Virtual enterprise
This occurs in a network of separate businesses connected by information technology to share resources, cut expenses, and gain access to one another’s markets.
10. Captive Service Operations
Some organizations go as far as establishing and operating some form of a partly/ wholly-owned entity overseas. This method makes room for greater control and allows you to control confidentiality and security issues. However, your economies of scale will be negatively affected.
