Quản trị kinh doanh - Chapter 10: Global sourcing

1Chapter 10:Global SourcingPurchasing and Supply Chain Management, 3rd edition, Copyright 2013, W. C. Benton Jr., All rights reservedCurrent TrendsSignificant increases in global purchases Many firms rely on global sourcing to remain competitive and surviveCommon emphasis on outsourcing of white-collar jobsIssues related to global sourcing:CostsCurrency exchange ratesBehavioral issues2Costs of Global SourcingCost categories:AdministrativeCosts not directly involved with the producte.g., identification, qualification, program development, travel, broker fees, and othersForeignCosts not incurred if a domestic source were founde.g., duty charges, customs fees, import fees, and currency exchange costs, etc.CommonCosts common to both global and domestic sourcinge.g., direct labor and materials costs, lead-time costs, transportation costs, inventory costs, etc.3Currency Exchange RatesDepending on the length of the contractForeign purchase cost may changePayment OptionsIn foreign currencyStrong dollar: Lower cost of goodsWeak dollar: Higher cost of goods In U.S. currencyLess riskRisk-sharing contractPayment fluctuates with exchange rates4Strategic Considerations of Global SourcingThe advantages of sourcing offshore must be weighed against the associated riskGlobal sourcing viewpoints:QuantitativeExchange rate uncertaintiesDirect costs of importation Indirect importation costsQualitative National interestsEthical consequences of “sweat shop” laborHazardous working conditions5Offshore Sourcing AnalysisThere is a tendency to overestimate the cost savings from global sourcing.Determination of accurate freight and duty costsConsider the impact of the following issues:DistanceCommunicationTime value of moneyQuality issuesPipeline inventory problemsStaffing issuesCompetition6Freight and Duty Costs Estimation Example7Global Provider OpportunismForms of provider opportunism that can play a value-destroying role in global outsourcing relationships:Shirking The extent to which the service provider is inclined to deliberately underperform or withhold resourcesPoachingThe extent to which the service provider is inclined to utilize information gained through its relationship with the customer for its own benefit8Power and Global Sourcing RisksIncreased risk of outsourcing provider shirkingBuyer relationship–specific investmentsMediated powerDecreased risk of outsourcing provider shirkingProvider relationship–specific investments Not poachingNon-mediated power9CountertradeThe exchange of goods for goods in full or partial payment of a sales transactionPopular forms of countertrade:OffsetIndirect offsetCoproductionLicensed productionSubcontractor productionTechnology transferBarterCounterpurchaseBuyback10Questions?11