Post on 17-Jul-2015
OUTLINE
Global Sourcing Overview
Logistics
Compliance
Counterfeit Part Issues
Selecting the Global Partner that is Right for You
OVERVIEW: WHAT IS GLOBAL SOURCING
• Global Sourcing’s main goal is to leverage lower cost
economies in foreign countries to gain a market advantage.
• Factors to consider when sourcing globally are:
• What part of the price do I want leveraged (labor/material)?
• Will the risk of distance and logistics outweigh the benefits?
• How can quality and delivery be controlled?
• In many cases, lower labor costs are the motivation; however,
losing visibility of the process can lead to quality risks, and as
economies grow so do wages.
• Takeaway is that a long term global sourcing plan needs to be
developed.
OVERVIEW – SUCCESSFUL GLOBAL SOURCING
• Long term outsourcing success requires resources. If the effort
is complex and resources are not dedicated, problematic issues
will occur (poor quality, delivery problems, logistic and
transportation issues, compliance issues)
A Successful Global Sourcing Plan Includes:
Measurable objectives for what is to be outsourced so that it can be managed
Realistic cost goals that take into account on-site risk visibility and mitigation
Researching business partners in detail for synergy – including on-site visits
Have an outsourcing plan that gradually builds so a business rhythm can be established
Dedicate the resources to manage the outsourcing effort and establish relationships
GLOBAL SOURCING: LOGISTICS
• Probably the scariest part of global sourcing (and outsourcing in
general) a product or service is the loss of visibility and control.
• This is especially true when multiple transportation methods and
carriers are involved (i.e., land, air, sea).
• Tracking technology has advanced considerably and satellite tracking
now covers 98% of the planet – but it is expensive.
• Lower cellular cost options are available but cover less area.
• Tracking decisions need to measure realized value versus cost by
strategically investing to protect the most valuable assets/resources.
• As with any initiative, start off slow when implementing sophisticated
tracking and logistic initiatives – this builds an affordable program
that is “right sized” for the business.
GLOBAL SOURCING: LOGISTICS (CONTINUED)
• In addition to transportation visibility, process visibility is as or
even more important.
• With counterfeit part issues increasing at a rapid rate, process
integrity has become a critical issue.
• So how can this visibility be achieved? It depends on the scale
and associated risk..
Value Risk Resource Investment
Low Detailed questionnaire (experience, customer base, processes)
Medium On-site visits; possibly on-site QC inspections
High Satellite operation for consistent surveillance and admin support
GLOBAL SOURCING: COMPLIANCE
• Different countries have different laws
• Ignorance is no excuse if valuable assets get stuck in customs
• Invest the time required to understand export and compliance
regulations before you make your outsourcing decision
• Compliance = Cost >> Spend it wisely
GLOBAL SOURCING: THE COUNTERFEIT PROBLEM
• Extent of the counterfeit part problem:
• $1.7 Trillion dollar economy (2% of world-wide output or equivalent to
the 12th largest GDP)
• Commodities impacted: Apparel/fashion (#1), electronics, pesticides,
chemicals, and pharmaceuticals (some countries have over 70% of their
pharmaceuticals counterfeited)
• #1 Counterfeit product exporter: China
GLOBAL SOURCING: THE COUNTERFEIT PROBLEM (CONTINUED)
• So if we know that dealing with counterfeit part issues is going
to be a way of life, how do we deal with it?
• Many technologies are being made available to counter this
issue including holograms, RFID (Radio Frequency), and nano-
labeling. Problem is that even some of these countermeasures
can be counterfeited.
Process:
Prepare a mold, then mix the right amounts of
resin, starch, coagulant and pigments to make
egg white. Sodium alginate, extracted from
brown algae, gives the egg white the wanted
viscosity. Then add the fake egg yolk, a
different mix of resin and pigments. Once the
proper shape is achieved, an amalgamate of
paraffin wax, gypsum powder and calcium
carbonate makes for a credible shell.
Ingredients Side Effects
Glucolactone Metabolism Disorder
Benzoic Acid Liver Disease/Dementia
Calcium Chloride Nerve and Liver Disease
Cellulose Metabolism Disorder
Alum Blood Production
Amino Acid Metabolism Disorder
Food Coloring Sickness in Stomach
Sodium Alginate Congestive Heart Failure
Gelatin Kidney Damage
SELECTING THE RIGHT GLOBAL PARTNER
• So what do we look for when selecting global outsourcing
suppliers?
• Answer:
Criteria Reason
Regional Stability Is the country’s political system stable
Culture Is there cultural synergy for effective communication
Business Infrastructure Are disciplined processes in place
Flexibility Are these processes adaptable
Global Experience Have they done business overseas
References Who with
Supplier Management How do they screen and manage their supply chain
SUMMARY AND CONCLUSION:
• Global outsourcing takes research and effort
• Just focusing on price alone will cause problems
• Evaluating and selecting an outsource partner that compliments
your existing business rhythms is key
• Research both the supplier and the country/region
(stability/compliance/counterfeit pervasiveness)