CADORNA CALAWOD BELA-ONG SAWIT

GLOBAL

SOURCING

the process of

identifying, developing,

and utilizing the best

source of supply for the

enterprise, regardless of

location

GLOBAL

SOURCING

Global sourcing

comprises both shared

services and outsourcing

solutions that can be

implemented

domestically and

offshore.

GLOBAL

SOURCINGShared Services

concentration of an

organization’s resources;

performing similar activities,

normally distributed across

the organization, to service

multiple internal partners with

the common goal of

achieving customer

satisfaction

Outsourcing

GLOBAL

SOURCING

the provision by a third party of defined services, which

can involve a transfer of assets, intellectual property

and/or staff

COMMON REASONS FOR

GLOBAL SOURCING

Reducing overall cost structure

Availability of a new technology and capacity

Establishing alternative sources of supply

Access to new designs or specialized intellectual

capital

Government incentives

Superior quality

GLOBAL SOURCING

FACTORSGlobal sourcing factors that must be understood and

balanced can be segmented into six categories:

1. Material Costs

GLOBAL SOURCING

FACTORSGlobal sourcing factors that must be understood and

balanced can be segmented into six categories:

2. Transportation Costs

GLOBAL SOURCING

FACTORSGlobal sourcing factors that must be understood and

balanced can be segmented into six categories:

3. Inventory carrying out

GLOBAL SOURCING

FACTORSGlobal sourcing factors that must be understood and

balanced can be segmented into six categories:

4. Cross-border taxes, tariffs, and duty costs

GLOBAL SOURCING

FACTORSGlobal sourcing factors that must be understood and

balanced can be segmented into six categories:

5. Supply and operational performance

GLOBAL SOURCING

FACTORSGlobal sourcing factors that must be understood and

balanced can be segmented into six categories:

6. Supply and operational risks

HIDDEN COSTS OF

GLOBAL SOURCING1. Internal Expenses

2. Supplier Health

3. Post-contract lull

4. Duty and tariff changes

5. Contract non-compliance

6. True inventory costs

7. Logistics Volatility

8. Technology

9. Quality breakdown

QUANTITATIVE AND

QUALITATIVE

ASPECTS

QUANTITATIVE

ASPECTSthose that are easily measurable

Logistics

Economic

Quality

Information and Communication

QUALITATIVE

ASPECTSthose which are more difficult to quantify

Political

Legal

Cultural

Bureaucratic

Environmental

Ethical Nature

GLOBAL RISK

ISSUES1. Distance

the distant between the

buyer and selling firm is

significant in terms of time

zones and physical

location.

2. Communication

GLOBAL RISK

ISSUES

can be described as the

glue that holds together a

sourcing relationship.

3. The value of money

GLOBAL RISK

ISSUES

Currency Exchange Rates.

Depending on the

performance and strength

of the dollar, goods can

cost American firms

different amounts from

what's expected.

4. Quality Issues

GLOBAL RISK

ISSUES

the buying firm must

spend the necessary time

to correctly specify and

articulate quality

expectations.

5. Pipeline inventory

GLOBAL RISK

ISSUES

pipeline inventory issues

will always occur when a

third party (the shipper) is

involved.

6. Staffing

GLOBAL RISK

ISSUES

if a buying firm is to be

effective with an offshore

sourcing strategy, it must

either hire experts or

develop specialists that

are assigned to offshore

suppliers.

NEGOTIATIONNegotiation is a process in

which explicit proposals are

put forward for discussion in

order to reach

agreement on an exchange

or on the realization of a

common interest where

conflicting interests are

present.

NEGOTIATIONwhen negotiating a

purchase agreement,

there are general

attributes in dealing with

various offshore

suppliers.

FOREIGN TRADE

ZONESFTA Act of 1934created trade zones to

encourage exports from

foreign countries

The act allowed for the

storage of goods within the U.S

boundaries without payment

until the goods passed to the

buying company

EU (European Union)the formulation of this leads to

the elimination of customs

formalities between countries.

There also will be tariffs

reductions in 4000 categories

of manufacturing goods as

well as other schedules for

reducing trade barriers.

FOREIGN TRADE

ZONES

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE1. Offsets

are commercial practices

required as a condition of

purchase of goods and

services.

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE2. Indirect offsets

occur where products or

services transferred in an

offset arrangement are

unrelated to the specific

products referred to in the

export agreement

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE3. Coproduction

this form of agreement

involves that purchaser

being given a share in the

manufacture of a foreign

designed product.

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE4. Licensed production

is when the recipient

obtains a share of the

production work for its own

order.

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE5. Subcontractor production

in this case the prime

contractor substitutes an

existing supplier with one

located in the buying

country.

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE6. Barter

the non monetary

exchange of goods-for-

goods.

COUNTER TRADEexchange of goods for goods in full or partial

payment of a sales transactions.

FORMS OF COUNTER TRADE7. Counter purchase

the seller exchanges

products for

compensatory amounts of

commodities.