Global Sourcing is one of the most modern, interesting, and fastest-growing management strategies. The term “global sourcing” comes from the combination of two English words: “global“, meaning worldwide or international, and “sourcing“, meaning purchasing or procurement. Global Sourcing incorporates numerous features of the outsourcing strategy, which states that a company, in order to achieve high efficiency, should narrow the scope of its operations to certain core areas. The remaining internal areas of its operations should be outsourced to external partners, i.e., companies that are able to perform services for the parent company better and more cheaply. The word “global” here means that the search for these partners should take place in global, worldwide markets.
The Global Sourcing strategy has a long history. Already in ancient times, merchants traveled to distant countries by ship or animal to buy more cheaply and to turn these regions into new sales markets. Such a policy was already pursued in the 3rd century B.C. by the Sumerians with the Egyptians or the Syrians with the inhabitants of Asia Minor.
From that period to modern times, the importance and role of global purchasing have undergone numerous transformations. The actions that had the greatest impact on the current position of this type of procurement took place in the 1970s. Even then, international corporations were trying to produce individual parts in different parts of the world. They sought a kind of combination of low-cost labor, cheap raw materials and components, few environmental protection requirements, liberal labor laws, good access to the capital market, and low tax burdens. This strategy was termed “Global Sourcing” by G. Junne.
Currently, it is said that a uniform definition of Global Sourcing does not exist. In one of many approaches, Global Sourcing means the effective use of global natural resources. This definition indicates that one should buy cheap raw materials, produce in countries with low wage levels, and sell in attractive markets. For most authors who have developed a definition of Global Sourcing, this term usually means international or global purchasing. However, they should not be understood in an operational sense, but as a concept playing a strategic role and exerting a major influence on competitiveness, as well as determining the company’s position.
It should also be emphasized that Global Sourcing is more than just a simple orientation of supply markets toward new countries. Strategic global purchasing is not limited only to securing the supply of necessary products and services. Knowledge of foreign markets and suppliers allows a company to plan its future development at the right moment and reap the benefits. This is because it is a strategy that creates a long-term relationship between the company’s purchasing and the best suppliers. The enterprise must therefore embrace Global Sourcing as a strategic opportunity. This meaning of global procurement and its temporal dimension are presented in Figure 1.
The article comes from the magazine “Logistyka” 5/2009.