Global sourcing is an increasingly popular business strategy, but it’s not easy to execute. There are seven typical characteristics of organizations with outstanding global sourcing.
As organizations search for new and better ways to compete, global business strategies will continue to receive increasing attention. One area in which globalization can move from concept to practice is global sourcing, an advanced approach to sourcing and supply management that involves integrating and coordinating common materials, processes, designs, technologies and suppliers across worldwide buying, design and operating locations. Since most organizations do not have well-developed global sourcing strategies in place, improvement opportunities in this area are attractive and as yet largely unrealized. Shifting from a narrow cost-reduction emphasis to an emphasis on globally integrated and coordinated sourcing strategies should improve an organization’s competitiveness.1
Our research suggests that many executive managers, particularly at large U.S.-based manufacturing companies, clearly desire to obtain the benefits available from more advanced sourcing approaches. The reality, however, is that most companies currently lack the understanding, capability or willingness to operate at such demanding levels. This can have serious consequences when companies have competitors that truly understand how to integrate and coordinate their worldwide activities. Companies that produce and sell worldwide should no longer view global sourcing as an emerging strategy.
From our research, we have identified key features that characterize leading global sourcing organizations. These characteristics will help executives understand what an effective global organization looks like and compare their progress and practices against global sourcing best practices. The participants in our research were primarily large, North American–based multinationals, involved largely in manufacturing rather than services. (See “About the Research.”) Given the size and location of participating companies, we make no claims about whether the results of the study can be generalized to a broader population of companies, particularly to small and medium-sized companies, or to companies headquartered outside the United States.