Optimal sourcing refers to the decision to locate operations in the place in the world that brings the greatest advantage to the firm in terms of customer contact, cost efficiency, human resource skill need, or other objective. For example, a software company may choose to locate in the Silicon Valley of the U.S. or Sophia Antipolis on the Cote d'Azur of France in order to be close to programmers and engineers with needed technical skills for new product development. Alternatively, if the firm seeks low cost, high skilled labor, it may locate one or more facilities in Hyderabad or New Delhi. In order to reach customers in developing markets of Russia, the company may locate offices in Novgorod, Kursk, or Vladivostok. If a firm locates work based on placing it as close as possible to the resource supply as possible, then the firm is placing high value on optimal sourcing. Alternatively, if a firm locates work based on other factors, such as being conveniently close to headquarters or in a particular city, country or geographic region where the company has existing business or operations, then optimal sourcing is low.

To answer question about optimal sourcing you may think about the following:

To what extent does your firm make decisions about where to locate its operations based on the following criteria:

1. close proximity to customers (1) – (5)? ___
2. close proximity to human resources, whether skilled or unskilled (1) – (5)? ___
3. close proximity to suppliers (1) – (5)?  ___
4. close proximity to business partners (1) – (5)? ___
5. close proximity to resources to its ongoing business (1) – (5)? ___

We suggest that you use an averaging procedure of the detailed scores to get to the overall score, but you may make an overall estimate of the score if you prefer.
An average score of 1 means very low while an average score of 5 means very high.