Question

Remaining competitive means that supply management must contribute to profitability by focusing on growth and innovation as well as cost saving. World class supply management requires that leaders align with business unit stakeholders, understand their requirements for success, develop a deep insight into the global supply market’s ability to meet these requirements and negotiate contracts, manage supplier relationships that create a competitive advantage. Making sourcing decisions is a dynamic and difficult task, given the complexity and challenges that exist under current market condition. Select and visit an organisation you are familiar with. As a Supply Chain Management consultant tasked with guiding the organisation, you are required to develop a report that will provide a competitive advantage through strategic sourcing. Your report should cover the following aspects of strategic sourcing:

4. Assess the organisation’s worldwide sourcing practices. Explain how Nike as the organisation can benefit from worldwide sourcing. (10)

Answer 1

Strategic sourcing is a very important source of competitive advantage. For Nike, which is a world leader in apparel manufacturing and marketing, sourcing from markets wherein cost of production is low and quality is good can be a significant cost advantage. So if Nike decides to go for world wide sourcing, it can tie up with local manufacturers in places such as Vietnam and Bangladesh etc. to get apparels manufactured and then ship it to nearest markets.  

Using this has got twin advantage for Nike, it can get goods manufactured at competitive rates as well as help local producers to improve in quality and processes. Moreover it can rationalize the distribution process so that they can supply to emerging markets from nearby locations thus saving on logistics and shipping costs. As a result, strategic sourcing can be a source of competitive advantage for Nike.