Essay On Global Sourcing

Global Supply Article Review

Global sourcing involves proactively integrating and coordinating common items and materials, processes, designs, technologies, and suppliers across worldwide purchasing, engineering, and operating locations (Monczka, et al, 2009, p.347). For example, if a toy manufacturer finds that manufacturing and delivery costs are lower in a foreign country due to lower wages of foreign employees, the company might close the domestic factory and use a foreign manufacturer. See also outsourcing, international procurement organization. Global sourcing offers many benefits, including lower costs, faster go-to market time and a broader resource pool.

Global sourcing often aims to exploit global efficiencies in the delivery of a product or service. These efficiencies include low cost skilled labor, low cost raw material and other economic factors like tax breaks and low trade tariffs. The whole point of global sourcing is to find better sources of supply around the world, offering improved quality and lower prices (Delaney, 2014, p.1). Global sourcing can be beneficial in several other areas for business too, but like any other endeavor, issues can arise and disrupt business if a strategic, well thought out plan is not place.

One major problem involved in global sourcing involves the selection of suppliers. Whether the purchaser or an external agent coordinates the international purchase, foreign suppliers must be subject to the same, or in some cases more rigorous, performance evaluation and standards as domestic suppliers. Never assume a foreign company can automatically satisfy a buyer’s performance requirements or expectations. Some good evaluation questions to ask are: Will the foreign supplier maintain any p...

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... identified as lower costs, access to resources, the ability to quickly ramp headcount up or down, and the opportunity to operate around the clock. All are good and valid reasons to consider this big step. Reduced labor cost is a huge benefit of global sourcing. Computer science professionals in developed markets are extremely expensive; $60-80K to start, well over $100K with relevant experience. It makes the $20-25 per hour rates for offshore developers and testers pretty attractive. Access to unique skills is also an attractive bonus. Recruiting and retaining professionals with the requisite skills, is time-consuming, and expensive. Utilizing the services of an offshore development organization can provide properly skilled professionals, while ensuring that your project complies with sophisticated development and QA methodologies (Crawford, 2012, p.1).