Review of Strategic Sourcing in Engineering: Optimization Techniques and Cost Management

Abstract

Strategic sourcing plays a critical role in the engineering sector, where the optimization of procurement processes and effective cost management are essential for enhancing project success and maintaining competitiveness. This narrative review explores the intersection of optimization techniques and cost management strategies within strategic sourcing in engineering. The review synthesizes existing literature on various optimization methods, including linear programming, mixed-integer programming, and heuristic approaches, highlighting their application in supplier selection and resource allocation. Additionally, the review examines cost management techniques such as total cost of ownership (TCO), activity-based costing (ABC), and cost modeling, discussing their integration with optimization methods to improve sourcing decisions. The challenges associated with implementing these strategies, particularly in complex engineering projects, are also addressed. The findings underscore the importance of a holistic approach to strategic sourcing, where optimization and cost management are integrated to achieve more effective and efficient procurement outcomes. The review concludes by identifying gaps in the literature and suggesting directions for future research, particularly in the application of emerging technologies in strategic sourcing.