„Es ist nicht genug zu wissen, man muß es auch anwenden;
Es ist nicht genug zu wollen, man muß es auch tun.“
Goethe
Globalisation of markets progresses rapidly and leads to more competition. In times of Supply Chain Management, Cost Saving Measures and Outsourcing companies have to reorient their business planning. New concepts are necessary to reach a cost efficient production. In this context, globalisation must not only be considered as global selling of own products. With the same effort global logistics and procurement have to be taken into account to gain global success.
Global Sourcing is already known as conscious orientation of a purchasing strategy. However, its implementation hasn’t gone far yet. Increasing economical interweaving and better technological possibilities make Global Sourcing, even for middle-class companies more relevant than never before. Global Sourcing is more than just buying goods and services in foreign countries. In bounds of company philosophy, efficient strategies have to be developed to ensure international competitiveness. Extending of purchasing options, access to world-wide know-how or even increasing sales of own products are just some features of this concept.
Before integrating the Global Sourcing Concept in other company strategies a closer look is necessary. The focus of this term paper remains in showing Global Sourcing as a part of the reorientation of purchasing, determining its features and risks as well as indicating the strategy of Global Sourcing. For not going beyond the scope of this work, I will refrain from exact determination of every single sourcing strategy (Sourcing Toolbox). Even it’s not its task to set exact guidelines, concerning the integration into company’s strategies. Additionally this term paper mostly refers to the industrial view and just in part to the retailing sector.
At a glance
- Grade: 1.3 (1.0 is the best grade)
- Discusses a national study based on 57 answered questionnaires
- Uses a Four-Area-Matrix to distinguish purchasing approaches
- Uses Smart automobile production in Hambach as a glocalisation example
Table of Contents
1. Introduction
2. Strategic Decisions of Supply Management
3. The Concept of Global Sourcing
3.1 Definition
3.2 Types of Sourcing
3.3 Relevance of Global Sourcing
3.4 Purchasing Concepts – Global Sourcing Portfolio
4. Different Types of Global Sourcing Organisations
4.1 Central Purchasing
4.2 Coordination
4.3 Outsourcing
5. Reflection of Global Sourcing
5.1. Chances
5.2. Risks
6. Conclusion
Objectives and Topics
This seminar paper examines global sourcing as part of the strategic reorientation of purchasing. It asks how the concept combines international procurement with supply management, and considers its organisational forms, opportunities and risks.
- Strategic decisions in supply management
- Supplier-, unit- and region-related sourcing
- The global sourcing portfolio
- Central purchasing, coordination and outsourcing
- Opportunities and risks of international procurement
Excerpt from the Book
2. Strategic Decisions of Supply Management
A lot of modern management conceptions are based on commonly and partly old-fashioned instruments. Therefore a critical analysis is necessary to set guidelines, in which direction the future-oriented purchasing will lead. Supply Chain Management focuses on the complete supply chain and not only on 1st-tier Supplier. Real Supply Chain Management is only possible due to coordination of purchasing and materials logistics. According to Prof. Dr. Ulli Arnold there are four aspects of central importance for the competitiveness of the whole enterprise. First of all companies have to consider, in which case cooperation between supplier and purchaser is useful. In the last years Single Sourcing and Modular Sourcing as a conclusion of tight cooperation was aimed, to improve vertical cooperation effects and through that obtain the suppliers know-how. In some cases cooperation is counterproductive for the purchaser, since cooperation includes the elimination of the supplier’s competition. The option cooperation or coordination depends on the purchasing object. Measures, which promote the competition, are tasks of purchasing, especially in terms of standard products. In the meantime both cooperation and support of supplier competition can be combined to gain optimal results.
Procurement and purchasing are a core component of the overall company’s organisation. Meanwhile a change of the company’s organisation away from centralisation is obvious. Although decentralisation of company structures in the sense of a profit-centre conception provides autonomy of subsidiaries and departments, decentralisation leads to a loss of synergy effects or “Supply Economies of Scale”. This especially results in a loss of quantity discount. Redundancy as a conclusion of atomising procurement activities contains an increase of purchasing costs.
Through that electronic support of purchasing in the sense of e-procurement more and more gets relevant. Purchasing information systems and electronic purchase systems facilitate the central activity of purchasing despite split and on-demand ordering. However the personal contact between supplier and purchaser remains a central part of the future-oriented purchasing. Modern procurement conceptions require a high extend of trust. This is only possible due to intensive cooperation between purchaser and supplier.
Chapter Summaries
1. Introduction: The paper introduces global sourcing in the context of competitive markets and outlines its focus on purchasing strategy, features and risks.
2. Strategic Decisions of Supply Management: This chapter considers supplier cooperation, competition, centralisation, electronic procurement and the relationship between local and international sourcing.
3. The Concept of Global Sourcing: The author defines global sourcing, distinguishes sourcing types and discusses its relevance. A portfolio places purchasing approaches within geographic and strategic dimensions.
4. Different Types of Global Sourcing Organisations: This chapter discusses central purchasing, coordination and outsourcing in relation to companies’ degrees of centralisation and internationalisation.
5. Reflection of Global Sourcing: The author examines potential benefits, including access to cost-efficient sources and supplier expertise, alongside communication, legal, logistical and currency risks.
6. Conclusion: The closing chapter considers global sourcing in relation to supply chains, company strategy and the wider reorientation of purchasing.
Keywords
global sourcing, purchasing strategy, supply management, international procurement, supply chain management, sourcing portfolio, supplier cooperation, central purchasing, outsourcing, international purchasing offices, procurement risks, competitiveness
Frequently Asked Questions
What is this work about?
It examines global sourcing as a strategic approach to international purchasing and as part of a broader reorientation of procurement.
What are the central topics?
The work covers sourcing concepts, purchasing strategy, organisational structures, opportunities and risks.
What is the main objective?
The author aims to explain global sourcing, identify its features and risks, and describe its strategic role in purchasing.
What research method is used?
The work uses a conceptual discussion supported by books and online sources, including a cited national study.
What does the main body cover?
It discusses supply management decisions, sourcing categories, the global sourcing portfolio, organisational forms and the opportunities and risks of international procurement.
Which keywords characterise the work?
Key terms include global sourcing, supply management, purchasing strategy, supplier cooperation, outsourcing and procurement risks.
How does the global sourcing portfolio distinguish purchasing approaches?
It considers geographic reach alongside the strategic contribution of purchasing, distinguishing traditional purchasing, international purchasing, strategic procurement and global sourcing.
What role do international purchasing offices play?
They can help companies access foreign purchasing markets and support activities such as logistics and contract negotiation.
Which example illustrates the combination of global and local sourcing?
The author points to Smart automobile production at the MCC industrial park in Hambach, France, as an example of glocalisation.
- Quote paper
- Wolfgang Schneid (Author), 2004, Global Sourcing - The strategic reorientation of purchasing, Munich, GRIN Verlag, https://www.grin.com/document/54024