In times of “lean-production” and globalisation it’s not just the output-markets that profit from those trends, it’s also the input market which is heavily influenced by the movements towards a worldwide orientated economy. This development is promoted by new and innovative transportation-, packaging- and stock concepts as well as by improving conditions in telecommunication and the successive fall of trade barriers especially within regional economies like the EU or NAFTA.
Table of Contents
Introduction
1. Definitions
2. . Context of global sourcing
a. branch specific context
b. company specific context
3. Strategic Concept
a. Targets of global sourcing
b. The Types of procurement
c. The choice of regions
d. The quantity of sources
4. Organisation
a. Organisational structures
b. Centralisation Vs Decentralisation
5. Chances and risks
6. Current development
Objectives and Topics
This paper examines the strategic implementation of global sourcing, focusing on how companies adjust their purchasing policies to tap into worldwide markets while balancing organizational structures and supply chain complexities. The primary research goal is to identify how firms can optimize procurement to gain competitive advantages while mitigating the specific risks associated with international operations.
- Strategic procurement planning and global sourcing objectives.
- Organizational structures for international purchasing (centralization vs. decentralization).
- Evaluation of opportunities and inherent risks in foreign market sourcing.
- Development of supply chain management as a modern procurement approach.
Excerpt from the Book
3.3. The choice of regions
At the analysis of preferred regions it is very important to distinguish between regions to be supplied with raw materials and regions from where finished articles are delivered.
An auto company that treats Western Europe as a single market is Ford. The Map 1 shows how Ford of Europe dispersed the various manufacturing activities for its Fiesta to different locations in Western Europe. (This figure shows the geographical pattern of only the network within Ford; independent component suppliers are not shown.) Some components are single sourced to take advantage of economies of scale. For example, all carburetors are supplied by the Belfast plant; all transmissions are built at Bordeaux; Basildon supplies radiator assemblies; Treforest makes spark plugs. Final assembly operations are performed at three locations: Dagenham in Great Britain, Saarlouis in Germany, and Valencia in Spain. Ford reasons that it can better customize the product to local needs by doing this. In addition, it can make up for shortfalls of production at one location by shipping cars from one of the other locations. The result is a complex network of crossborder flows of finished vehicles and components. Presumably, Ford locates the various activities in particular locations because it believes these are the most favorable locations for performing those activities.
Summary of Chapters
Introduction: This section introduces global sourcing as a consequence of lean production and globalization, driven by improved transportation and reduced trade barriers.
1. Definitions: The chapter clarifies key terms like purchasing, procurement, and global sourcing, emphasizing the strategic adjustment of purchasing policies toward worldwide markets.
2. . Context of global sourcing: This chapter analyzes how branch-specific production patterns and company-specific factors like size influence international procurement decisions.
3. Strategic Concept: It outlines the targets of global sourcing, such as cost reduction and quality improvement, and explores procurement types and geographical strategies.
4. Organisation: This part compares traditional organizational structures with modern material management and discusses the trade-offs between centralization and decentralization.
5. Chances and risks: The chapter evaluates the strategic advantages of global sourcing against the specific country and transactional risks involved in international trade.
6. Current development: It discusses the transition toward integrated supply chain management and the importance of long-term partnerships and electronic data interchange.
Keywords
Global Sourcing, International Purchasing, Supply Chain Management, Procurement Strategy, Centralization, Decentralization, Cost Targets, Quality Targets, Risk Diversification, Lean Production, Trade Barriers, Supplier Networks.
Frequently Asked Questions
What is the core focus of this work?
The work focuses on the strategic management of international procurement, explaining how companies organize their purchasing activities across borders to maximize efficiency and competitiveness.
What are the central thematic areas covered?
The key themes include procurement definitions, strategic target setting, organizational design for international firms, and the evolving role of global supply chains.
What is the primary goal of the author?
The goal is to provide a comprehensive overview of how international purchasing decisions are structured and how they impact a company's overall operational success.
Which scientific methods are applied?
The author uses a descriptive and analytical approach, combining standard economic definitions with case-based examples like Ford's European production network to illustrate theoretical concepts.
What is covered in the main section of the paper?
The main part details the strategic components of sourcing, including regional choices, quantity of sources, the organization of materials management, and the management of risks versus opportunities.
What characterises the keywords of the work?
The keywords highlight the intersection of procurement, international business management, and supply chain logistics, reflecting the focus on global organizational efficiency.
How does Ford's case study illustrate regional sourcing?
Ford is used as an example to show how a company disperses specific manufacturing activities across Europe to achieve economies of scale and better customize products for local needs.
Why is the choice between centralization and decentralization important?
This choice dictates whether a company can better bundle purchase power (centralized) or stay flexible and responsive to local plant needs (decentralized).
- Quote paper
- Kai Hunzelmann (Author), 2000, Global Sourcing, Munich, GRIN Verlag, https://www.grin.com/document/10460
