Global Sourcing And Global Sourcing

CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION ABOUT THE STUDY :

Customers expect the companies to satisfy their demands very quickly, multinational companies are constantly establishing linkages in terms of suppliers and distributors to meet customer needs, if they fail to do so, the companies lose their competitive advantage over other companies. Hence to quickly respond customers and support flexibility, MNC’s implement several strategies.

Global Sourcing is the method of sourcing from the global market across geographical boundaries for goods and services. As competition between industries increases, the importance and role of purchasing has similarly enlarged. As today’s companies’ effectiveness is directly connected to the competitiveness of their supply base, hence many businesses have carried out global sourcing strategy to gain access to the best supplier’s potential. According to Trent and Monczka, global sourcing helps companies to access the best suppliers in the world. Companies that have successfully implemented global sourcing have proved cost savings. However, it also gives other benefits such as quality, availability of resources and overcome competition.

To understand the opportunity of global sourcing, there is a necessity to understand the differences between global sourcing and international purchasing. International purchasing states that a purchase is completed between a buyer and supplier located in different countries. This trade often has longer lead times, currency fluctuations and complex rules and regulations. Which is more tedious compared to local purchases. On the other hand, global sourcing differs in both complexity and scope from international purchasing. It involves a approach which is f...

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...al sourcing. So there is a chance that the result may not be applicable for a specific industry. It deals only with identifying the major benefits and challenges faced by the companies, and it does not discuss about the cost involved in implementing global sourcing strategy.

The research study is limited to companies located only in India irrespective of industries such as pharmaceutical, automotive, information technology companies. etc.

The findings and recommendations made in this research are purely based on responses taken from the professionals; it may not be possible to prove theoretically in some circumstances. Knowing global sourcing is a long time process involving many hindrances, it is possible that few parameters would have not be taken to consideration for analysis even though it may be important to include it due to lack of knowledge about it.