Sourcing Strategy: Principles, Policy and Designs

Sourcing Strategy is about sourcing as a long term strategic activity. Myopic purchasing management stops short with describing functional procedures and procedural innovations such as online order processing.

The goal of this book is not merely to document sourcing strategy, but to provide the tools to determine it. Therefore, rather than merely describe common sourcing processes, the book takes a normative approach to sourcing strategy. It argues for a rational, complete and integrated process view. It supports its recommendations with logical arguments from an interdisciplinary and analytical approach grounded in microeconomics, law and business strategy.

Part 1 of the book explains the economic and business principles that underlie sourcing strategies. It derives policies that guide viable strategies to meet sourcing goals. Part 2 applies these to creative designs for standard sourcing scenarios.

Sourcing Strategy is about sourcing as a long term strategic activity. Myopic purchasing management stops short with describing functional procedures and procedural innovations such as online order processing. The goal of this book is not just to document sourcing strategy, but to provide the tools to determine it. Therefore, rather than merely describing common sourcing processes, the book takes a normative approach to sourcing strategy. It argues for a rational, complete and integrated process where managers confront conflicts and dilemmas inherent in sourcing. It supports its recommendations with logical arguments from an interdisciplinary and analytical approach grounded in microeconomics, law and business strategy.
Sourcing Strategy fills a gap in the literature between purchasing management and managerial economics. It adopts an accessible treatment that allows even non-technical readers to achieve an in-depth understanding without sacrificing on advanced insights from formal analyses. By applying established as well as new qualitative and analytic concepts to sourcing designs, such as VCG mechanisms for variable quantity awards; discriminatory second price reverse auctions for syndicated bids; signaling equilibrium for resource sharing; and selection risk-incentive risk interactions for R&D-cum-production contracts, this work will be an indispensable guide for those studying B2B marketing, strategic purchasing or supply chain management. Part 1 of the book explains the economic and business principles that underlie sourcing strategies. It derives policies that guide viable strategies to meet sourcing goals. Part 2 applies these to creative designs for standard sourcing scenarios. A user friendly software package is linked to the chapters, with guided exercises as a learning tool.