Question

Global sourcing has become more popular among manufacturing companies. For what segments of the purchasing portfolio would you recommend a global sourcing strategy? Discuss the advantages and disadvantages of global sourcing.

Answer 1

Global sourcing is nothing but the procurement of raw material/ resources from all over the world with most cost efficient way.

Since most of manufacturing company involves in producing useful product to customers, it requires many other raw material to make single useful product. Hence manufacturing companies are more popular in global sourcing.

I would like to recommend the global sourcing in Engineering Technology and Raw material segments. Because technology and raw materials are the main components of making a final product in manufacturing industries, without the good engineering technology and Raw material it is very difficult to make the final product in any manufacturing industry.

This is also because some countries have more man power and team membership. But they might be lack of Technology and Raw materials. So in that scenario it is good to go behind the engineering and Raw material segments.

Advantages of global sourcing:

• Global sourcing creates a good relationship between the countries.
• Easily make profit with good raw material and technology.
• Global sourcing helps in creation of jobs in the countries where there a product manufacturing.

Disadvantages of global sourcing:

• Due to export and import activities between the countries as a part of global sourcing leads to shortage of natural resources to the one country and more raw material to other country.
• Reduced job in the host country.
• Cost of obtaining the raw material/technology from the outside country is higher compared to buying the raw materials in the same countries if raw materials are available.