Worldwide Sourcing
Term Paper
Worldwide Sourcing
Many companies in today’s business world are exploring new ways to surpass their competitors. Over the past twenty years, there has been a significant increase in worldwide sourcing. According to Tim Minahan from SearchCIO, global sourcing is the process of identifying, evaluating, negotiating and configuring supply across multiple geographies to reduce costs, maximize performance and mitigate risks (Minahan, 2003). So why is going international so popular among business owners? Companies are striving to take this approach for many reasons. Some of the main benefits include cost reduction, improved quality, advanced technology, and availability of supplies. On the other hand, companies with no international experience often face barriers to worldwide sourcing. Typical problems consist of having lack of knowledge, currency fluctuations, longer lead times, and cultural differences. It is understood that the advantages of sourcing worldwide outweigh the disadvantages. Companies that take this approach go through many challenges but in the end those challenges pay off.
Primarily every business has a main objective they want to achieve. One of the biggest goals would involve reducing costs in order to increase revenue. This creates growth and drives a business into expanding. With other countries offering reduced costs, it makes sense why many companies are deciding to source globally. Labor and material rates can be much cheaper in countries outside of the United States. Paying employees top dollar increases the liabilities in a business and profits are decreased. Major corporations are now starting to build manufacturing plants in areas with lower wage rates in order to cut operating costs. Some actually will abandon their domestic plant and construct a brand new one wherever costs are cheaper. This gives them a huge advantage when it comes down to making profit in the long run.
Another big factor in worldwide sourcing is
Worldwide Sourcing
Many companies in today’s business world are exploring new ways to surpass their competitors. Over the past twenty years, there has been a significant increase in worldwide sourcing. According to Tim Minahan from SearchCIO, global sourcing is the process of identifying, evaluating, negotiating and configuring supply across multiple geographies to reduce costs, maximize performance and mitigate risks (Minahan, 2003). So why is going international so popular among business owners? Companies are striving to take this approach for many reasons. Some of the main benefits include cost reduction, improved quality, advanced technology, and availability of supplies. On the other hand, companies with no international experience often face barriers to worldwide sourcing. Typical problems consist of having lack of knowledge, currency fluctuations, longer lead times, and cultural differences. It is understood that the advantages of sourcing worldwide outweigh the disadvantages. Companies that take this approach go through many challenges but in the end those challenges pay off.
Primarily every business has a main objective they want to achieve. One of the biggest goals would involve reducing costs in order to increase revenue. This creates growth and drives a business into expanding. With other countries offering reduced costs, it makes sense why many companies are deciding to source globally. Labor and material rates can be much cheaper in countries outside of the United States. Paying employees top dollar increases the liabilities in a business and profits are decreased. Major corporations are now starting to build manufacturing plants in areas with lower wage rates in order to cut operating costs. Some actually will abandon their domestic plant and construct a brand new one wherever costs are cheaper. This gives them a huge advantage when it comes down to making profit in the long run.
Another big factor in worldwide sourcing is
Cited: Minahan, T. (2003). Global sourcing: What you need to know to make it work. SearchCIO. Retrieved from http://searchcio.techtarget.com/news/918624/Global-sourcing-What-you-need-to-know-to-make-it-work Flintoff, C. (2012) Where Does America Get Oil? You May Be Surprised. NPR. Retrieved from http://www.npr.org/2012/04/11/150444802/where-does-america-get-oil-you-may-be-surprised Monczka, R. Handfield, R. Giunipero, L. Patterson, J. (2011) Worldwide Sourcing Chapter 10. Purchasing and Supply Chain Management. Fifth Edition. 358-391. Overby, S. (2009). Offshore Outsourcing: Pay Attention to Foreign Exchange Rates or Pay the Price. CIO. Retrieved from http://www.cio.com/article/496954/Offshore_Outsourcing_Pay_Attention_to_Foreign_Exchange_Rates_or_Pay_the_Price Palmer, A. Mena, C. Khan, O. Christopher, M. (2007). Counting the costs of global sourcing. Supply Chain Standard. Retrieved from http://www.supplychainstandard.com/liChannelID/21/Articles/1082/Counting+the+costs+of+global+sourcing.html