The changing global market is causing organizations to rethink their sourcing strategies. While this type of analysis has always been an important exercise it is even more important in the current environment of unpredictable tariffs, geopolitical tensions, supplier instability, inflationary pressures, environmental, social and governance demands.
A Supply Chain Sourcing Study is a structured, data-driven analysis of where and how an organization procures its goods, materials, or services, with the goal of optimizing cost, service, risk, and sustainability. It’s often a key part of a broader supply chain strategy or initiative. Its goal is to ensure sourcing strategies are not only cost-effective, but also resilient, aligned with business goals, and compliant with growing regulatory and sustainability requirements.
The study looks closely at the current state of sourcing. It assesses which suppliers are being used, where they’re located, what’s being purchased, and at what cost. The sourcing study can also look at whether suppliers are meeting expectations in areas such as quality, reliability, and delivery times. Another component that needs to be understood is risk and identifying supplier exposures due to geopolitical instability, financial health of vendors, or exposure to natural disasters.
The Cost Analysis
Mechanically the optimization study looks at total landed cost modeling of one or more product groups at a time. For example, a restaurant company or food distributor might look exclusively at cups as a product group to optimize. Multiple suppliers for cups provide shipping locations, product cost, transportation cost, handling cost that would be included in the product price. Tariffs are also included in the model as this obviously has had a large impact on product costs. The data is then optimized and the results identify the optimal cup supplier layout strictly based on cost. Lowest cost supplier will show in the results as capturing the most lanes into the company distribution centers. But these results are then used as inputs for the remaining aspect of the study where the less quantifiable inputs to the study are included.
Applying business constraints
Beyond the initial cost analysis there are the questions of supplier expansion or consolidation, dual sourcing strategies, nearshoring, or shifting to lower-risk or lower-cost geographies. In the example of the cups sourcing study the question of multiple suppliers and dual sourcing strategies will come into play. Does the organization decide to have multiple suppliers for each of the cup SKUs? Will there be multiple suppliers for SKUs into the distribution centers? Does the organization divide up the cup suppliers to allow the SKUs to be single sourced but divide up the SKUs among the suppliers? For example, certain suppliers get hot cups and certain suppliers get cold cups. There are many strategies to allow for guidelines that ultimately have a large impact on the final suppliers to be awarded business. Applying these constraints to the sourcing model will identify the cost of each of these strategies. This additional cost information can then be applied to final supplier determination.
Risk factors
Another factor to consider is risk assessment. The last several years have shown just how vulnerable global supply chains can be. A sourcing study helps organizations identify where they are most exposed—to political instability, natural disasters, capacity constraints, or overdependence on a single region or vendor. By mapping the supply base and evaluating concentration risk, companies are better positioned to mitigate disruption before it happens.
Additional factors
Beyond operational considerations, sourcing strategies increasingly need to support broader business and sustainability goals. Whether it’s expanding into new markets or supporting the launch of new product lines a sourcing analysis moves in lockstep with organizational priorities. A sourcing study ensures that procurement decisions reinforce—not hinder—those strategic directions.
The output of a sourcing study is both detailed and actionable. Organizations typically walk away with supplier scorecards, risk and cost heat maps, alternative sourcing options, and a phased implementation roadmap that aligns with operational capabilities and timelines. Equally important, the process fosters internal alignment by bringing together procurement, supply chain, finance, operations, and even sustainability teams around a shared set of insights and objectives.
Final thoughts
Organizations often initiate a sourcing study during key inflection points. These can include entering a new geographic market, responding to supplier performance issues, pursuing cost-saving initiatives, post-merger integration, or reevaluating strategy following global events such as the COVID-19 pandemic, geopolitical conflicts, or changes in trade policy. Ultimately, a sourcing study transforms procurement from a transactional function into a strategic enabler. It empowers leaders to make informed, data-backed decisions that reduce cost, improve performance, mitigate risk, and align sourcing with long-term business goals.
If your supply chain is feeling the strain of rising complexity or shifting global dynamics, now may be the right time to rethink your sourcing model. A sourcing study provides the clarity and direction needed to ensure your organization is not just reacting to today’s disruptions—but actively shaping a smarter and more resilient future.
—Tom Schaefges, St. Onge Company
