Global sourcing, or global procurement, needs little by way of introduction. Most companies are willing to look beyond national borders in order to purchase basic raw materials or source other resources such as personnel, energy or capital. Although supply chain management and global sourcing are regarded as separate and unique specializations, there is an obvious link between both disciplines. The correlation between supply chain management and global sourcing can lead to conflicts of interest and inefficiency, especially where they overlap. However, a company can set itself apart by capitalizing on business opportunities precisely at this ‘interface’ between procurement and supply chain management.
At consulting firm Groenewout, global sourcing is part of our supply-chain redesign methodologies. Many organizations can benefit from organizational improvements in the areas of supply chain sourcing, global sourcing, collaboration with suppliers, procurement strategies and non product-related (NPR) cost reduction programs. By ensuring optimal alignment between your sourcing activities and your supply chain, you can:
- Reduce (NPR) purchase budgets and the actual costs
- Create a competitive sourcing structure
- Stimulate professional sales and relationship management processes
Global sourcing for Flextronics
In order to give you a sense of our approach when providing advice on global sourcing and supply chain management, we are pleased to outline a project we completed for Flextronics. Flextronics is a leading international supplier of electronics and integrated supply chain services. The trend of shifting production activities to the ‘low wage countries’ formed the basis for this project. Flextronics wanted to explore the opportunities for manufacturing in Asia or Eastern Europe. We were asked to lend support by combining a quantitative (modeling) approach with qualitative analysis for one of the company’s strategic product groups. Subsequently, we examined a number of supply chain scenarios including the primary cost factors: production, purchasing, transport and logistics, import duties and taxes. In order to test the robustness of each one and hence identify the optimal supply chain solution, our consultancy analyzed the sensitivity of a number of options. Our strategic analysis revealed that moving the manufacturing activities to low wage countries would deliver considerable cost savings. We then developed a toolbox that enabled the procurement analysis to be applied to other existing, or even future, Flextronics product groups.
More global sourcing references
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