Strategic benefits and risks of global sourcing
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Published: Mon, 5 Dec 2016
1: A. What are the strategic benefits and risks of global sourcing? Sourcing in business is a procurement practice aimed at searching and evaluating suppliers of goods and services. Global sourcing is a practice that involves sourcing goods and services from the global market. This has brought about significant changes in the society, for instance” mobility of the people is increasing at a rapid pace since many years” (Kerkhoff 20).
Global sourcing has strategic benefits that come with it. Here are some major benefits of global sourcing.Incresed hours of operation. When one has a project to do, the most important resource allocated is time. A limited time is allocated so one has to meet the deadline. With a global sourcing provider, a business department that runs for 24 hours is present. This is mostly the IT department. Incase of reviewing a project, the IT manager makes suggestions and sends the message to the sourcing partner who replies so that the next day the revisions are made and the developments proceed.
Global sourcing reduces the production cost and operations greatly since the amount paid on overheads is decreased these. When cost of production reduces the company financial position greatly increases and the retained money can be used for other developments. Sourcing for employer is at a lower labor cost.
A global sourcing partner can be of use to complete projects at the busiest time for the company. This does away with the stress that accompanies a company hiring temporary IT employees. When a new business process is to be created, it can be faster with a global sourcing partner.Softwares and hardware are in place to turn ideas into products easily. Product quality has been improved due to increased competition on the global market. There has also been improved new product introduction.
Better global market reach.Bussinesses are enabled to reach international customers and improved service is offered, thus high procurement volumes and low complexity of materials. Rapid scaling of operations. Global sourcing enables the outsourcing company to subtract or add a new type of software easily.
For the employees they benefit in that they get higher wages, learn transferable skills and have improved working conditions.
There are also risks involved in strategic global sourcing. Loss of knowledge-knowledge is considered an asset. In global sourcing valuable knowledge is lost to the vendors and allow others to enter the market. There are risks that the total acquisition cost may be greater than what is expected. Piracy is also another risk.
B. What is the most important risk management concern in your organization? Risk management is a set of the processes that management uses to identify, analyse and if necessary respond appropriately to a risk that might interfere with the attainment of the business objective. The most important risk management concern in an organization is that which interferes with the main objective of the organization which is profitability of an organization.
C. What is the importance of training in risk management? And, what considerations arise when doing business globally?
The importance of training in risk management is that the manager is able to have a sixth sense which notices the likelihood of a risk taking place in future as a result of certain actions. When an organization has well trained risk manager this adds value to the organization. The manager will put up rules that will reduce the hindrances to attaining the company’s objective of maximizing profits.
The considerations that arise when doing business globally is that there exist Supply risk-these can be such as supply disruptions, longer lead time, lower responsiveness and quality problems. The other consideration is that there can exist process risk, which could entail communication problems and quality problems post-manufacture. There can be environmental risk such as natural disaster, terrorism, currency fluctuation and global pandemic. In consideration there should also be control risk such as loss of knowledge and piracy.
With these considerations the manager is able to decide what course to take and what not to while undertaking global business.
DQ 2: A. What supply chain management monitoring mechanisms does your company employ? How successful are they? How can they be improved? B. How does your company measure vendor performance? How does your company act on the measured results? C. How do you balance assurance of supply with the number of vendors used?
“A supply chain is a set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer”. “Supply chain management is the systemic, strategic coordination of the traditional business functions within a particular company and across businesses within the supply chain for the purpose of improving the long-term performance of the individual companies and the supply chain as a whole”.(Mentzer 2).
A company uses auditing, compliance and penalties as monitoring mechanisms for the supply chain management. They provide transparency. To improve these monitoring mechanisms the company should not only rely on them but rather to study the market and ensure that the mechanisms are efficient. The measured results are used against the objectives of the company and if they are less than expectations or astray measures are put to ensure operation is in conformation to the standards. To balance the assurance of supply with the number of vendors you there should be just in time delivery, and vendor data maintenance.
DQ 3: A. Why might a company use supply chain monitoring? Be sure to support you assertions. B. What types of metrics could be used in the monitoring process? Provide real-world example(s). C. How does the length of your supply chain affect how often the process should be monitored?
A company might use supply chain monitoring when it notices some anomalies in the supply chain so as to get the transparent details and the root of the problem that exists. Metrics such as cycle time, inventory turns and fill rates could be used. Inventory. When a supply chain is long it should be frequently monitored as it posses more risks and lots of errors and on the other hand when its shorter it is less frequently monitored.
1: A. What emerging technologies do you foresee in e-business over the next generation? Be sure to support your assertions? B. What new opportunities do you foresee in e-business over the next generation? Be sure to support your assertions C. Why are industry standards important to the success of e-business? Provide example(s)
Over the next generation there will be emerging technologies in e-business that will completely change the conventional way of doing business. There will be virtual markets where you can feel the smell and texture of products. Perhaps a client will be patched or wired and the qualities of the products fed on some data base and then transfer through some superhighway to the possible client. The opportunities foreseen are new markets and simpler and cheaper venues of doing business.
Industry standards are important to the success of business since ebusiness success lies on the infrastructure on which it is to operate. When the industry standards are high then the chances of businesses’ success is high as there will be no hindrances such as power shortages and wars.
2: A. What two technologies would best improve your organization’s profitability and performance? Be specific! B. What new technology has your company adopted that has not had much effect? C. What factors determine if a new technology will be useful or not? Be sure to support your assertions.
The two technologies are computer technology and biotechnology. Computer technology will greatly improve profitability and performance as the costs of production greatly go down as one laborer produces vast work using a computer. Performance will increase as for the computer accuracy is also one of qualities. Biotechnology will also greatly improve profitability as there will be less court proceedings due to pollution and community concerns. To determine if new technology will be useful factors such as societal effects, efficiency and economic viability. When the society is against the technology then it will not be useful as there will be no approval by the government. If the technology is not efficient then no one will be willing to use the technology. If its not economically viable then no organizations budget will be willing to venture into the technology.
3: A. What are communication standards and how might they differ between regions or countries? Be sure to support you assertions. B. What effect does this have on a global supply chain and how might a company overcome these differences? Provide real-world example(s). C. How might this be applied to your own company?
Communication standards are principles and policies of excellent quality set as a target for all government communications must conform. They are agreed on and are aligned with public’s expectations as they reflect the value of culture. They are set in writing and are with all government agencies.
On the global supply chain these standards are of great importance as different countries have different communication. To avoid these differences promotion of officials instead of information should be avoided, avoid delay in response, avoid arrogance and exclusion of other citizens who might have an interest. Be open to questions, be accessible to media and speak with one voice.
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