Ordering Schedule / Inventory Control Etc.
Sourcing is finding and evaluating the components and parts needed for goods and services. With a product based company such as my handbag company, sourcing materials would consume a lot of time, energy and funds. Raw materials would account for almost 50-70% of our costs. We spent a lot of time searching for our materials, especially leather. Because of the complexity of our designs, at times it was like looking for a needle under a haystack.
If you have a business with physical items it might not be necessary for you to source yourself. You could potentially contract with a full-service company that could source for you. Additionally, these full-service companies negotiate with the supplier the minimums, terms of payment and make sure that the product received is exactly what was ordered.
When raw materials are sourced, it is imperative that we help you look at the:
■ Colors as well as prints and other options
■ Performance characteristics
When purchasing directly from vendors you will need to negotiate with them the minimum that they expect you to buy (often just called minimums), lead times (production time), cost, delivery options and their return policies.
If there are a lot of suppliers which provide what you need, you may want to consider if you want to purchase domestically or foreign. If you are purchasing domestically, you will pay more because the product is already in your country and you will not have to worry about transportation costs or duties. With foreign sourcing, you will need to worry about those things as well as language barriers and cultural and different business practices. However, I always preferred to source overseas as I found much more selection that way.
Of course, your choice of materials will be different based on aesthetic and functional characteristics of your product, price point, expected sales volume and your business model.