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What is sourcing?

People get trapped by labels. One label that is fraught with meaning and (often painful) memory is procurement.

Perhaps they were involved in a purchasing committee for a large acquisition in the past. Or maybe they were stymied by the mind-numbing bureaucracy of a procurement department’s rules when trying to buy something bigger than a stapler.

Sourcing is part of procurement. But it can also be an activity that stands on its own.

For example, enterprise innovation teams search for startups and growth companies that can solve business unit problems. Typically reporting to the Chief Strategy Officer, these teams have an extraordinarily difficult job. They must sort through hundreds or thousands of startups to find the right solution from the right team.

When it comes to startup, it is not uncommon for the one that looks the least suitable to have the best problem-solution fit.

The startup doesn’t know, in this instance, that someone has a problem they can solve. The innovation team doesn’t know of the existence of this new company because they will take a linear approach. To narrow the search, buyers first imagine what the solution looks like. This is limiting.

We heard of a story involving the US Central Intelligence Agency. They were looking for a way to track individuals unobtrusively as they walked around. The winning solution came from a toy manufacturer. Apparently, the toy company had developed a product to help parents track toddlers when they went to the park.

The CIA stumbled across this concept when they posted an innovation challenge and gave it the widest possible distribution. (This is also an example of outcome-oriented thinking. Instead of telling the supplier what to build, the buyer with an outcome-oriented disposition tells the supplier what they want to achieve with the purchase.)

This win didn’t come through a procurement channel. But it ended up as a procurement.

Or consider corporate social responsibility teams looking for vendors owned, operated, and controlled by members of historically disadvantaged communities. CSR reps need to identify,  engage, and assess these firms. Eventually, the transaction ends up in the hands of procurement.

Sourcing is matching: finding the best solution to a problem.


Hiring is another example of sourcing. The employer wants to find the worker who will thrive in their organization, driving the most value and fitting in culturally.

One should think of finding customers as sourcing: finding customers who have the problem your company solves, who are collaborative, and who have the financial wherewithal for a long-term, growing relationship.

Sourcing is difficult.

For both the buy side and the sell side, It’s tough to sort through the thousands of companies with the potential to be a good fit.

The search process is time-consuming, expensive, and fraught with risk. What if you buy the wrong solution? You might have to live it with for months or years. It could have cascading consequences for other decisions you might make. The opportunity cost is high.

Procurement as a policy framework for acquisition, in practice, focuses on minimizing “waste, fraud, and abuse” while purchasing something that is deemed to be “good enough.” It imposes constraints on the process that address historic ways prone to exploitation. Implicit is the belief that following this kind of structured process will generate sufficient competitive options in terms of price and solution to address the underlying business requirement.

Correctly, people see sourcing such as innovation or diversity as specialized to the point that they merit a sourcing approach that delays or minimizes entanglement with procurement.

What happens if we separate sourcing from procurement?

Considering them as distinct processes permits us to optimize them both.

EdgeworthBox is a platform designed to get the most out of sourcing.

It’s an exchange with tools for hosting structured procurement data; standardizing and simplifying onboarding and RFx; and speeding up the sourcing process.

EdgeworthBox has little to no implementation and training cost. Buyers and suppliers alike access the tools, data, and community for free. Buyers pay a small transaction fee each time use EdgeworthBox to host a reverse auction like an RFP or RFQ. There is no risky commitment.

Our approach increases the quantity and the quality of responses buyers receive. Sellers like the simplicity and exposure to potential customers with the right product-solution fit.

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Chand Sooran

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