Strategic sourcing is the first stage of buying: finding suppliers, asking them for prices and choosing one. It is the "source" in source-to-pay, and it is a module of procure-to-pay software. Its main tool is the request for quotation (RFQ), a document that asks suppliers to quote a price for exactly what the company needs.
An RFQ lists the item, the quantity, the quality standard, the delivery date and the payment terms. Every supplier answers the same questions, so the quotes can be compared side by side. For a larger or more complex purchase, the company may first send a request for proposal (RFP). An RFP asks suppliers how they would do the job, not only at what price. Suppliers often answer it with RFP software. Governments follow fixed rules for the same process, described on the page on government tenders.
The hard part is the work around the RFQ. Someone has to find suitable suppliers, answer their questions, chase the ones who have not replied and bargain with the cheapest few. For routine purchases, this work is now often done by an AI agent, software that acts on its own towards a goal that the buyer sets.
Say a snack maker in Indore needs 5 lakh printed pouches for a festive pack. The buyer sets the goal: ₹2.20 a pouch or less, delivered in three weeks. The agent sends the RFQ to eight approved suppliers. Two suppliers ask whether a matte finish is acceptable, and the agent answers from the specification. Six suppliers quote, from ₹2.18 to ₹2.65 a pouch; the average is ₹2.36. The agent asks the three cheapest for a better price on a 12-month contract. The cheapest supplier comes down to ₹2.08. The agent shows the buyer all six quotes, the negotiation and its recommendation, and the buyer approves it. The order is worth ₹10.4 lakh. At the first-round average price, it would have cost ₹11.8 lakh.
The agent does not award the order on its own. A person approves every award, because a wrong supplier can stop a production line. This way of working is called human in the loop. Large or unusual purchases, such as a new machine, are still negotiated by people.
The same agent can also sign up a new supplier. It collects the supplier's documents, checks them and adds the supplier to the approved list. The wider idea, software that buys on a person's behalf, is covered on the page on agentic commerce. The quantity to buy usually comes from planning, for example from concurrent planning, where the demand and production plans are made together.