Global Sourcing

A controversial essay

Essay, 2014

6 Pages, Grade: 9,0


Global Sourcing

Within the past years the world of economy has changed drastically and so did the importance of purchasing as a function in organizations. The automatization of processes or rather groundbreaking technologies have replaced face-to-face contact with customer by quick phone calls, internal and external letters by e-mails and eventually the procedure of manually placing orders got substituted by e-procurement. As a consequence, one of the most significant by-effects is the increasing demand of customers with respect to a product’s differentiation; and of course every company that wants to prove itself as a successful business has to meet customer’s demand in the most stringent way one can conceive.

The compulsory task of purchasing gradually turned into a function whereby lots of money can be saved but also by which important relationships between supplier and customer can be maintained in a sustainable way. In order to satisfy the abovementioned needs different firms developed different methods and approaches to achieve this goal effectively but apparently one means was the most fashionable. Horn, Schiele and Werner (2013) stated that 95% of the managers they surveyed have severe plans to become active within the global context over the next years. When speaking about global sourcing people tend to confound the term with the classic concept of international purchasing. On contrary to international purchasing global sourcing describes the proactive behavior of coordinating and incorporation commodities across worldwide boundaries (Trent and Monczka, 2003)

Because of the fact that Global Sourcing is a relatively new approach to purchasing, it is not sufficiently researched yet (Kaufmann and Carter, 2006) and therefore needs to be treated as cautious and accurate as possible. Moreover the further economic impact of Global Sourcing is not fully known yet. Some surveys refer to possible cost savings between 5% and 20% (Frear et al., 1992; Petersen et al., 2000) whereas others hold out hope of more than 30% savings (Trent and Monczka, 2003).

Due to the uncertainties concerning this topic the following question has arisen: Is global sourcing an appropriate means to increase corporate performance from the perspective of a buying organization located in an industrialized country?


Excerpt out of 6 pages


Global Sourcing
A controversial essay
University of Twente
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ISBN (eBook)
ISBN (Book)
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339 KB
global, sourcing
Quote paper
Max Weiß (Author), 2014, Global Sourcing, Munich, GRIN Verlag,


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