Please enable JavaScript.
Coggle requires JavaScript to display documents.
Globally Sourcing Suppliers (Local vs. Global - Things to consider (The…
Globally Sourcing Suppliers
Benefits
If a certain product is unavailable to produce locally but is available elsewhere in the world
Cost savings (cheaper to produce abroad than produce here, possibly due to geographical conditions)
Access to a higher quality product
Cost reduction (labour, facilities, infrastructure - be careful of ethics)
Shortening of product development time
Satisfying counter-trade obligations (can get a product we don't readily make in exchange for something we have a lot of - both parties win)
Challenges
Cultural, politcal or legal differences
Lack of technology
Poor infrastructure (IT, comm.)
Customs procedures may be strict, costly and time-consuming
Exchange rate fluctuations
Instability (e.g. economic, political)
Local vs. Global - Things to consider
The nature and structure of the market sector, and choose the one that will benefit you the most
The level of predictability of demand
Lead times involved in shipping the products - if it takes too long depending on the product it is pointless and would be better just sourcing locally
Nature of product life cycles - sell by dates on products
Degree of specialism of retailer
Cost of labour, facilities, and infrastructure in domestic vs. offshore markets
Importance of quality with regards to merchandise
Availability of suitable qualified labour
Risks
Supply Risk
Supplier disruptions
Unreliable suppliers
Environmental and sustainability risk
Fluctuations in interest rates, quota restrictions (government-imposed trade restriction that limits the number, or monetary value, of goods that can be imported or exported during a particular time period)
Unanticipated resource requirements
High levels of Co2, carbon footprint emissions during global sourcing activity
Process and control risk
Inefficient supply chains in the organisations
Demand risk
Variations in demand
Uncertainties in demand