This article is the next in a series presenting the role and importance of the Global Sourcing strategy, i.e., global procurement strategies.
Strategic planning for Global Sourcing differs significantly from strategic planning for domestic procurement. It requires going through three basic stages, which include:
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selection of the appropriate country – procurement region
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selection of the appropriate foreign supplier
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selection of the appropriate product that can be supplied on an international level.
Selection of the appropriate country
As part of developing a Global Sourcing strategy, one must choose from many potential countries (procurement regions) those that can contribute to achieving goals directly related to global procurement. The choice of the appropriate country (region) depends here mainly on its specific characteristics related to costs, risks, or the possibility of success for the enterprise.
Since choosing the right country for global procurement is not an easy process, one should use the experience of experts in this field, who have identified the 4 best regions for Global Sourcing. These include: China, India, Turkey, and Eastern European countries (Poland, Czech Republic, Hungary, Romania).
China is a country where one can buy simple, mass-produced products at extremely favorable prices. The following products are recommended for purchase in China:
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metal machine parts, including ball bearings, armament components
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plastic parts made on injection molding machines
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electrical wiring harnesses, cables, electronic components
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food products
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special, technologically complex chemical industry products
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textiles, shoes
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toys
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promotional and office supplies
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furniture (standard, simple).
India – a country of well-educated engineers, IT technicians, and service industry professionals. The following products and services are recommended for purchase:
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IT – services, outsourcing
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pharmaceutical technology, biotechnology
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engines, pumps, machines, apparatus, and equipment
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complex parts in small quantities
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leather goods, cotton, silk, textiles, carpets.
Turkey – a country with business-friendly economic policy; good potential for complex, mass-produced products. Recommended for purchase are:
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textile industry products (e.g., clothing, hygiene products, automotive filters, airbag materials)
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food products
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automotive parts
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machine parts
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electronic products
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chemical products.
Eastern Europe – in terms of geographical location, the closest supplier for Western European manufacturers. In this region, the wage level is relatively low, and the quality requirements for manufactured goods are relatively high. Relatively short distances and low labor costs are the greatest advantages of these areas. Recommended for purchase are:
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wood products
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textiles
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machine and equipment construction
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metal parts for machines and equipment
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packaging
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printing products
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processes related to movement (freight forwarding companies).
It should be noted here that when choosing the appropriate country for global procurement, the criterion of membership in the European Union is not taken into account.
The article comes from the magazine “Logistyka” 3/2010.