What is direct sourcing?

Direct sourcing is a procurement strategy in which a company directly sources goods or services from suppliers, rather than going through a third-party intermediary such as a distributor or reseller. This approach allows companies to have more control over their supply chain, improve cost efficiency, and build stronger relationships with suppliers.

Benefits of direct sourcing include:

• Cost savings: By cutting out intermediaries, companies can negotiate directly with suppliers to secure better pricing and terms.
• Quality control: Direct sourcing allows companies to have more visibility into the production process and quality standards of their suppliers, ensuring they meet the company's requirements.
• Faster lead times: Eliminating intermediaries can streamline the procurement process and reduce lead times for getting goods or services to market.
• Greater transparency: Direct sourcing gives companies more insight into the sourcing process, allowing them to trace the origin of materials and ensure ethical and sustainable practices are being followed.

However, direct sourcing also comes with its own challenges, such as the need for companies to invest in building and maintaining relationships with suppliers, managing logistics and transportation, and ensuring compliance with regulations and quality standards. Overall, direct sourcing can be a beneficial strategy for companies looking to improve their supply chain efficiency and control.