SCM 371 Final Study Guide
Global Sourcing
Importance of global sourcing: Study by Aberdeen research showed that 37% of companies surveyed found global sourcing as very important for company success. Overall, statistics show we import source more than we export source. Canada is #1 trading partner, Venezuela has oil.
Levels in the evolution towards global sourcing: Asked purchasing agents where they are now with global sourcing and then where they see themselves in the future.
Level 1: Only domestic purchasing {Current 8.4%, Future 5.9%}
Level 2: Int’l purchasing as needed {Current 20.1%, Future 6.5%}more transactional purchasing of goods at 1 time
Level 3: Int’l purchasing part of sourcing strategy {Current 18.8%, Future 7.8%} more transactional purchasing of goods at 1 time
Level 4: Integration of global sourcing activities across worldwide locations {Current 22.7%, Future 20.9%}
Level 5: Integration of global sourcing activities w/ other functional groups {Current 29.9%, Future 58.8%}
*Overall global sourcing is on the rise (higher level does not always mean better). Companies have to choose the level that best fits their business. RFID tags are getting smaller and smaller and reduces the effort by just passing by a scanner and tracking itself
Int’l purchasing (tactical): Just purchasing goods
Global sourcing (strategic): Purchasing capabilities, knowledge, and innovation. Goes beyond low cost
Motivations and benefits of global sourcing: Wider range of suppliers, gaining more knowledge, focus on core competencies, lower cost, access to tech and innovation, perception, access to different raw materials, differentiation, global source could be closer to production source, build brand overseas. Brazil, Russia, India and China (BRIC) use to be low cost countries but have now evolved.
Barriers and challenges of global sourcing: Regulations, communication, transportation cost/visibility, laws, currency issues, times zones, lack of control, security, quality.
Importance of global sourcing: Study by Aberdeen research showed that 37% of companies surveyed found global sourcing as very important for company success. Overall, statistics show we import source more than we export source. Canada is #1 trading partner, Venezuela has oil.
Levels in the evolution towards global sourcing: Asked purchasing agents where they are now with global sourcing and then where they see themselves in the future.
Level 1: Only domestic purchasing {Current 8.4%, Future 5.9%}
Level 2: Int’l purchasing as needed {Current 20.1%, Future 6.5%}more transactional purchasing of goods at 1 time
Level 3: Int’l purchasing part of sourcing strategy {Current 18.8%, Future 7.8%} more transactional purchasing of goods at 1 time
Level 4: Integration of global sourcing activities across worldwide locations {Current 22.7%, Future 20.9%}
Level 5: Integration of global sourcing activities w/ other functional groups {Current 29.9%, Future 58.8%}
*Overall global sourcing is on the rise (higher level does not always mean better). Companies have to choose the level that best fits their business. RFID tags are getting smaller and smaller and reduces the effort by just passing by a scanner and tracking itself
Int’l purchasing (tactical): Just purchasing goods
Global sourcing (strategic): Purchasing capabilities, knowledge, and innovation. Goes beyond low cost
Motivations and benefits of global sourcing: Wider range of suppliers, gaining more knowledge, focus on core competencies, lower cost, access to tech and innovation, perception, access to different raw materials, differentiation, global source could be closer to production source, build brand overseas. Brazil, Russia, India and China (BRIC) use to be low cost countries but have now evolved.
Barriers and challenges of global sourcing: Regulations, communication, transportation cost/visibility, laws, currency issues, times zones, lack of control, security, quality.