International purchasing and global sourcing: Managerial Implications

by Robert J. Trent, Robert M. Monczka

Supply managers need to be realistic concerning the level of worldwide sourcing that will best satisfy their organizational requirements. While most firms expect to pursue the highest global sourcing level, that may not be the most appropriate action. Many factors affect the sourcing level that firm should pursue. These include the intensity of worldwide competitive, customer improvement requirements, available skills and resources, the location of buying and engineering centers, the location of worldwide suppliers, and the performance impact that global sourcing can have on firm performance. Managers need to assess realistically the worldwide sourcing level their firm should operate at and then identify what level they currently operate. If a gap exists, plans to narrow that gap must become part of the strategic planning process.

Supply professionals should also view global sourcing as a process rather than as a set of discrete activities or approaches. As a process, global sourcing should become an integral and imbedded part of supply planning and execution. Developing a systematic global sourcing process makes sense for a number of reasons. Well-developed and understood processes accelerate learning as participants become familiar and experienced with a defined process. Furthermore, defined processes can "build-in" best practices and knowledge that enhance the likelihood of success. Perhaps most importantly, organizations can document, measure, and continuously improve their global sourcing process.

It is important for managers to recognize that global sourcing is significantly more complex than international purchasing. The process requires executive vision, leadership, and an intense commitment of time and resources. Furthermore, firms that are highly decentralized will face obstacles if they try to pursue a process that requires extensive coordination and integration.

Supply managers must also recognize that the definition of global sourcing will change. In fact, while most firms that practice global sourcing today view it as way to integrate global strategies across functional groups and locations, leading firms are beginning to move beyond that perspective. Some supply managers now view global sourcing in terms of not only strategy development and contracts, but also as a way to develop common supply processes that incorporate best practices and efficiencies. Examples where firms will begin to converge on common processes or practices globally involve supplier evaluation and selection, cost management, supplier development, and early supplier involvement. As mentioned earlier, sourcing process consistency may be the most powerful benefit that firms eventually realize from global integration.

(adapted from http://findarticles.com/p/articles/mi_hb6503/is_4_39/ai_n29046094/pg_9/?tag=content;col1)

Reading Text it is possible to draw the following conclusion about global sourcing: