Key Elements of a Successful Global Sourcing

Global Sourcing has increasingly become a buzz word in the supply chain industry and many organizations operating globally have, to varying extent, adapted this practice.

But what makes global sourcing successful? The following are key elements that come into play when considering to implement global sourcing.

1. Identification of commodities with global synergy

Identify common goods or services that the organization’s entire global operations have a need for. Example of these would be raw materials such as steel, plastic, aluminum that an automotive manufacturing uses. In terms of services, an example would be electronic catalogue content management that can be managed by a supplier globally.

2. Centralized procurement that will drive and oversee the global sourcing

It is also essential to identify a central team in the organization who can lead the sourcing, and who will have the strategic view of managing the spend.

The best candidate for this role would be the market or region in the organization that contributes to the biggest spend. Having said this, it is important that this central team would be impartial in terms of driving an outcome that is fairly equitable to each market/region participating in the global sourcing. The mindset would be the total cost  to the whole enterprise and benefits are equitably shared.

3. Supplier with Global Footprints

A crucial element of the sourcing is the availability of a supplier that can strategically match the global footprint of the organization that requires to be serviced.

This supplier must have processes that are standard across its global operations to ensure consistency and expect efficiency

4. Standard Processes that can be coordinated and implemented globally

As much as suppliers are expected to have global standard processes, the organization must also look into standardizing the way it operates globally. It means utilizing standard systems, alignment of performance expectations, and implementation or adaptation of the same practices.

5. Global Utilization of resources or assets – adopting a strategic orientation for  asset- and resource-management.

One way of being able to enjoy the benefits of global sourcing is strategic utilization of assets and resources. The organization must have a good grasp of how to achieve the most effective and most efficient use of its resources. An example of doing this is identifying strategic locations to build capabilities and be able to allow flexibility and riding the highs and lows of meeting demands.

Global sourcing when done properly can be a critical feature of the organization that can drive its core competitiveness – by directly impacting  the bottomline, making the supply chain efficient, drive consistent quality or greatly improve delivery performance.