Sourcing Strategies: How to find the right suppliers?

Sourcing helps businesses identify, evaluate, and select suitable suppliers to ensure stable supply and optimize costs. In this article, IDC will explain what sourcing is, its benefits, common types, sourcing process, and supplier evaluation criteria. 

What is Sourcing?

Sourcing is the process of identifying, evaluating, and selecting suitable suppliers to meet a company's needs for raw materials, goods, or services. It is an essential part of the supply chain, helping businesses maintain production, optimize costs, and ensure product quality.

The Role of Sourcing in Business

In April 2025, U.S. President Donald Trump raised tariffs on Chinese apparel to as high as 145%, prompting many U.S. retailers to quickly reduce orders from Chinese factories and shift their sourcing to Vietnam, Bangladesh, India, and other Asian countries.

According to McKinsey's 2024 survey, global apparel companies seeking to diversify their sourcing are increasingly prioritizing countries such as Bangladesh, India, and Vietnam. More than 40% of respondents plan to increase sourcing from these markets.

• Ensuring a stable supply: Building a diverse and reliable supplier network helps businesses maintain a consistent supply, proactively meet production demands, and reduce dependence on a single supplier.
• Optimizing purchasing costs: Thoroughly analyzing and comparing factors such as pricing, payment terms, logistics costs, and trade policies enables businesses to select efficient sourcing solutions, optimize budgets, and improve business performance.
• Improving supply quality: Screening and evaluating suppliers based on production capacity, quality management systems, technical standards, and their ability to meet requirements helps ensure consistency and quality in finished products.
• Minimizing purchasing risks: Proactively identifying and managing risks related to delivery schedules, product quality, documentation, and unexpected costs helps make the purchasing process more transparent, consistent, and efficient.
• Strengthening negotiation power: Access to multiple potential suppliers provides businesses with more information and alternatives, strengthening their position when negotiating prices, minimum order quantities (MOQ), delivery times, and partnership terms.
• Supporting long-term sourcing strategies: Developing a network of capable and adaptable manufacturing partners lays the foundation for a sustainable supply chain while supporting business expansion, product diversification, and stronger market competitiveness.

Understanding the differences between Sourcing, Procurement, and Purchasing

Sourcing, Procurement, and Purchasing are all related to purchasing activities, but they differ in scope and function.

Common types of Sourcing

Depending on their purchasing objectives, target markets, budgets, and operational strategies, businesses can choose from different sourcing approaches.

Global Sourcing

Global sourcing is an approach in which businesses source and purchase goods from international suppliers rather than limiting their options to the domestic market. This approach is commonly used when companies aim to optimize costs, access specialized raw materials, or obtain high-quality products and technologies from overseas.

Advantages:

• Access to a wider range of products and competitive pricing.
• Suitable for products, materials, or technologies that are not widely available domestically.
• Opportunities to expand global supplier networks.

Disadvantages:

• Exposure to risks related to exchange rates, transportation, customs clearance, and documentation.
• Generally longer delivery times.
• Requires careful assessment of product quality, legal compliance, and overseas suppliers' capabilities.

Local Sourcing

Local sourcing involves prioritizing suppliers within the same country or in areas close to a company's production or business operations. This approach is suitable for businesses that require faster deliveries, easier quality control, and reduced logistics risks.

Advantages:

• Shorter delivery times.
• Easier communication, supplier inspections, and issue resolution.
• Lower transportation and warehousing costs, along with fewer import-related risks.

Disadvantages:

• More limited sourcing options compared to international markets.
• Potentially higher prices in less competitive domestic markets.

Single Sourcing

Single sourcing is an approach in which a business chooses to work with only one supplier for a particular product, raw material, or service. This approach is suitable for companies seeking a stable supply, consistent quality, or long-term partnerships with strategic suppliers.

Advantages:

• Easier supplier management and coordination.
• Potential for better commercial terms through long-term volume commitments.
• Greater consistency in product and service quality.

Disadvantages:

• Increased dependence on a single supplier.
• Higher risks if the supplier experiences delivery delays, price increases, or production disruptions.

Sole Sourcing

Sole sourcing occurs when only one supplier is capable of providing a specific product or service. This may result from proprietary technology, patents, or specialized manufacturing capabilities.

Advantages:

• Consistent product quality.
• Easier access to specialized technologies.
• Greater flexibility in product specifications.

Disadvantages:

• Greater dependence on the supplier.
• Exposure to price fluctuations.
• Risk of supply disruptions.

An Effective Sourcing Process for Businesses

• Identify Purchasing Needs: Before searching for suppliers, businesses need to clearly define what they need to purchase, the required quantities, quality standards, and estimated budget. The more specific the requirements, the more accurate and time-efficient the sourcing process will be.

• Conduct Market Research and Shortlist Suppliers: Once purchasing needs are identified, businesses conduct market research to find potential suppliers. These can be sourced through B2B platforms, trade fairs, industry associations, partner referrals, or existing supplier databases.

• Send Requests for Quotations or Tender Documents: Businesses then send Requests for Quotation (RFQs) or tender documents to shortlisted suppliers. Clear and detailed requirements help suppliers provide accurate responses, avoiding incomplete quotations or difficulties in comparison.

• Evaluate and Compare Suppliers: After receiving quotations, businesses should evaluate suppliers based on multiple criteria rather than selecting the lowest price alone. A suitable supplier should offer a balance of cost, quality, delivery capability, and reliability.

• Negotiate Commercial Terms: Once suitable suppliers have been shortlisted, businesses move into the negotiation stage. The objective is not only to secure competitive prices but also to establish terms that support stable transactions and minimize future risks.

• Select Suppliers and Sign Contracts: Following negotiations, businesses select the supplier that best meets their established criteria and proceed with contract signing. The contract should clearly define both parties' rights, responsibilities, and commitments to support implementation, monitoring, and dispute resolution.

• Monitor and Evaluate Supplier Performance: Sourcing does not end once a contract is signed. Businesses should continuously monitor supplier performance to determine whether to maintain, expand, or replace supplier relationships in the future.

Supplier Evaluation Criteria in the Sourcing Process

IDC - Effective Sourcing and Supplier Management Solutions

IDC Sourcing is a sourcing company based in Vietnam, specializing in helping international brands and businesses connect with reliable manufacturers. We operate across a wide range of industries, including footwear, apparel, home décor, gifts, consumer goods, and industrial materials.

• Supplier Sourcing: Based on specific product requirements, IDC researches, screens, and connects clients with suitable manufacturers in Vietnam.
• Product Development: IDC helps businesses bring their product ideas to life through design consultation, 3D modeling, technical documentation, material selection, and sample development.
• Factory Evaluation: IDC evaluates manufacturing capabilities through on-site visits, reviewing operational processes, machinery, facilities, and production capacity.
• Commercial Negotiation: IDC communicates and negotiates with suppliers on pricing, minimum order quantities (MOQ), Incoterms such as FOB and CIF, production schedules, and other relevant commercial terms.
• Quality Control: IDC coordinates quality monitoring and control throughout the production process, from checking raw materials and technical specifications to inspecting products against agreed requirements.
• Logistics Support: IDC connects clients with suitable logistics partners and coordinates discussions on shipping solutions, delivery schedules, and relevant documentation.

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