Making Global Sourcing Work

The five phases of global sourcing that, if followed, allow an organization to implement a successful global sourcing strategy in the short-, medium- and long-term.


It may be appropriate to set up strategic alliances with companies, similar to your own, in order to source greater volumes of products or indeed different products. Strategic alliances can bring greater buying power with shared costs and reduced risk.

Before embarking on further growth and scaling it is imperative to consider the expected productivity and profitability gains of any new systems or resources. Growth can also be stifled by lack of critical tools at the right time.

Key questions

  • Can you identify routes to scale your global sourcing efforts in a way that complies with your original objectives?

  • Can you evaluate the performance of your current suppliers easily and accurately?

  • Do you have true visibility of the lifecycles of your products on a global scale? Are you able to track orders and the necessary logistics to deliver these to your customers?

  • Have you the tools and resources needed to accommodate scaling plans?

  • Can you identify any bottlenecks in the current global sourcing solution or processes that should really be outsourced or, conversely, insourced?

  • Where is your staff wasting time and effort

Phase 5 Expansion

Overview
There are many regions in the world suitable for global sourcing. It is a dynamic marketplace, and being tied to one region could ultimately be detrimental to operations. The most obvious way to expand is to source from other countries or continents. Today the potential marketplace stretches from Asia and the Middle East to a myriad of countries all with differing trade relations with the United States.

Areas that are hot today include China, South America and Eastern Europe. It is generally accepted that these areas will remain good sources for the next 10 to 15 years. China is the fastest growing exporter in the world ranked second only to Canada for exports to the United States. But, beware: When evaluating other countries it is essential to consider geopolitical issues, currency fluctuations and economic growth potential. There is a great variation in infrastructure, local laws, customs and attitudes toward business from country to country. Each country has its own set of business practices; cultural issues; legal requirements; and political, environmental and infrastructure risks. These must be understood and handled successfully. Additionally, wide regional variety exists, even within countries.

Research is key to your success and staying close to your global sourcing objective is imperative. All organizations should establish a savings threshold, balancing cost advantage with risk; below that threshold, the incremental risk and complexity that newly sourced products will introduce into the supply chain is not worth the cash saved.

It is also important to regularly evaluate your global sourcing strategy, processes and systems. Maintaining a coordinated strategy and a consistent approach is wise, but we live in an ever-changing world: customers change, product demand changes and competition changes.

Conclusion

For global sourcing, there is no debate: To remain competitive and in some cases to survive all companies should seriously consider the option. Regardless of where the company is in its life cycle, sourcing overseas should not be disregarded as too difficult, expensive or time-consuming. Indeed, as overseas suppliers have become more sophisticated improving capabilities and quality the road to global sourcing has been smoothed. At the same time, global logistics and telecommunications infrastructures continue to improve to support this ever-increasing trade in both products and services around the world.

Developing a global sourcing strategy and building the relationships and project infrastructure to support it will bring enhanced capabilities, streamlined projects and greater control of your organization's destiny.

A well-defined global sourcing strategy could be the key to your organization's future survival.

Helping to deliver these benefits are modern global sourcing solutions, whose key requisites include:

  • Flexibility built with change in mind;

  • Proven used by best-of-breed companies;

  • Customized to address the needs of the organization;

  • Scalable one that will evolve as your business evolves;

  • Easy and quick to implement; and

  • Capable of delivering a rapid return on investment.
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