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Towards a balanced global sourcing

• Prof. Corrado Cerruti
• Director Master in Relationships with Eastern
  Countries
• University of Macerata

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Decision framework for global sourcing
Adapted from Harrison van Hoek Logistics
Management and Strategy
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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!

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Path towards global sourcing
Global integration development-sourcing-operation
s
Coordinated global sourcing decisions
Systematic and strategic international sourcing
Spot international sourcing
Only domestic sourcing
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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
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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
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Global sourcing sourcing from Far East
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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)