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Towards a “balanced” global sourcing

Towards a “balanced” global sourcing. Prof. Corrado Cerruti Director Master in “Relationships with Eastern Countries” University of Macerata. Decision framework for global sourcing. Adapted from Harrison & van Hoek – Logistics Management and Strategy. Global sourcing.

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Towards a “balanced” global sourcing

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  1. Towards a “balanced” global sourcing Prof. Corrado Cerruti Director Master in “Relationships with Eastern Countries” University of Macerata

  2. Decision framework for global sourcing Adapted from Harrison & van Hoek – Logistics Management and Strategy

  3. Global sourcing • Global sourcing is driven by three major factors: • - consolidating the purchasing of all company divisions from a unique/few suppliers • - sourcing commodities items from low-wage economies • - taking advantage of bulk transportation • … however global sourcing needs to balance: • costs and risks/timeliness! • costs and market presence/innovation!

  4. Path towards global sourcing Global integration development-sourcing-operations Coordinated global sourcing decisions Systematic and strategic international sourcing Spot international sourcing Only domestic sourcing

  5. Balancing global sourcing operationally Cost advantages - Risk - Time Disadvantages Cost vs. “responsiveness” international vs. domestic sourcing Plus (even if at a higher cost) a second sourcing option

  6. Balancing global sourcing strategically Supply Chain Management Supply Chain Management Sourcing Strategy High Unrequired flexibility Market Strategic fit response capability Unbearable rigidity Low Demand Low High variability

  7. “Global sourcing” sourcing from Far East

  8. Towards a Europe/Asia partnership The European perspective: balancing European production potential (including low cost sources in Eastern Europe) and the Asian market potential The Asian perspective: balancing Asian mass market potential and European market/innovation potential (in spite of higher European production costs)

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