Saturday 8 November 2014

Global Sourcing Strategy – Could be Game Changing for Procurement Department

Authored by Usama Shahid

Implementing a successful global sourcing strategy is very different than sourcing from a foreign supplier which is a short-term solution.

Global sourcing today
Global sourcing is a hot topic in business today. Successes, especially in the I.T. industry, have created a truly global market for goods and services attracting companies seeking lower costs, faster time-to-market and access to a large pool of highly skilled resources. Emerging economies are a viable and cost-effective alternative to using more expensive, domestic resources.

The case for a global sourcing strategy
Although putting the necessary sourcing infrastructure in place takes time, money and resources, it will pay for itself many times over through higher efficiency, reduced costs and lower risks. Many countries have state of the art facilities and tax incentives to attract trade and recent advances in telecommunications provide speedy response and round-the-clock availability.

Issues to address in your strategy
Creating a global sourcing strategy requires attention to four broad issues: financial, cultural, legal and political. Political and legal issues must be addressed as they stand whilst financial and cultural issues are dependent on the type and style of business undertaken and the location of the activities and transactions which impact logistics.

Developing the strategy
Lessons from early adopters tell us to act proactively rather than reactively. Create a strategy for the long-term rather than the short-term. Some companies have applied global sourcing to discrete areas to gain benefits and gain experience rather than tackling too many projects early. Start by researching global sourcing options.

Implementing the global sourcing strategy
Research the key players in each market and see what they can offer your organization. Knowledgeable and experienced service providers will have the infrastructure and processes in place to provide continuity and stability, no matter where physical resources are located, and can free your company from dealing with any logistical or cultural issues and challenges.

Effectiveness of the strategy
Global sourcing strategy could be effective if certain critical factors are there. These are structures and processes, business capabilities, and top management commitment. Global sourcing initiative requires the integration and coordination of procurement requirements across worldwide business units.