Global Sourcing and Logistics, Research Paper Example

Introduction

Globalized economy is the current era in the United States. When companies are facing completion, they are often forced to contract logistic companies to offset their payout prices.  Logistics concentrate on the transportation and storage of goods. Logistics has four distinct phases: housing and transportation, cost of total process, operating costs and raw materials(Accenture, 2007).

Risk Evaluation

Several risk factors should be examined when dealing with logistics. Some risk factors are environmental, financial, cost, and customer service.  External communication of logistics can be a very complex system. When dealing with international logistics, it becomes even more complicated. When operating in different countries, companies are up against wide terrain and capacious space. Different countries have different laws about how logistics may operate.  Operating costs are important to international logistic companies. When operating internationally, companies tend to purchase greater quantities than they do when operating domestically. Companies may run into problems with time extensions, variability increases, shipping, custom permission authorization, and various other aspects for the international market. Customer service is the most important factor of logistics. The caliber of service anestablishmentdelivers to its customers will dictate the impact on market share, costs and profitability of supply chain activities (Cho& Kang, 2001). For example: In the international realm, customer service is dependent upon the country and product needed. The price that a customer may pay varies from country to country. The international market is changing. If each market does not understand how important customer service really is, ineffective customer service is eminent (Cho & Kang, 2001   ).

However, there are many risingnations that are recognized for lowpriceinternationalselling, but are subject to governmentalinsecurity and disorder. A company needs to be certain that their contractor will be able to delivergoodseffectively. Also, there is the factor of hidden costs because of different cultures and time zones.

To prevent and minimize risks, several precautions must be taken.  A company must enhance their information analysis capabilities to increase prevention. In other words, the company must know what is profitable for the company and what is not. There should be adequate feedback. For example, a great deal of companies in the United States loss profits when workers boycotted on the west coast, but other businesses that were knowledgeable on globalproduct sourcing (Kotabe, 1998   ). environment was able to manage.  Secondly, various logistic projects are a must to ensure the international supply chain is functional (Kotabe, 1998    ). According to Trent & Monczka, 2005 based upon the degree of international sales, each enterprise needs to develop a technique of international selling that is based upon collaboration between suppliers both locally and internationally.(Trent & Monczka, 2005  ).

Market

According to recent research, global sourcing is cost efficient. Other than cost saving, many researchers have recognizedsuperiority and obtainability as the most serious aspect of worldwide sourcing (Trent & Monczka, 2005  ). Today’s market is dominated by enterprises functioning globally. Consequently, the competition is fierce. For this reason, companies are seeking products that are unobtainablelocally, while improving value and accessibility of the desired goods.  When companies purchase goods nationally they acquirebusiness skills that are necessary when trying to build the company’s image internationally (Trent& Monczka, 2005). Using the global market provides a company with the following profits: availability to good quality merchandise, availability to cheaper goods, availability to technology, heightened competitive location, greater choice of merchandisers, improvedconsumer feedback, and meeting the competition of counter suppliers. (Trent & Monczka, 2005  ).                                   

Supply Chain

Supply choice is a dynamicfeature of international business. When working with international suppliers, unlike domestic, the costs involved in identifying and evaluating foreign suppliers can be astronomical.  Evaluating and choosing the right supplier is very important when using international sourcing, but it even more important to manufacturers (Fischer, 2003). According to Fischer, 2003, a company should consider the following when choosing a global supplier: access to technologieswhen purchasingproducts,enthusiasm to part technologies and material, worth, price, dependability, turnaround time, volume, sharing knowledge, place, and service (Fischer, 2003). All of these are important because different companies have different criteria based on all of the previously mentioned criteria. All of these factors can affect the prices companies have to pay for their products and in turn affect how the company has to charge its customers for the product.

Strategy

The global sourcing industry has experienced many changes over the past 20 years. One technique is to use in bringing products in,putting them together, and producing inside one country but selling to international buyers. An additionaltechnique is to use by local buyers. Some companies buy their products domestically and then have them assembled in foreign countries or vice versa. The goal of international selling technique is to cut the companies cost and make a profit. The contract strategy is the most popular strategy to use. F or example, many companies hire temporary workers as employees. Because they are temporary, companies save by not having to pay insurance and other benefits full time workers are required to have (Accenture, 2007).

References    

Accenture. (2007). Global sourcing and logistics: A roadmap for high performance.

Cho, J., & Kang, J. (2001). Benefits and challenges of global sourcing: perceptions of US apparel retail firms. International Marketing Review, pp. 542-561.

Fischer, S. (2003). Globalization and its challenges. The American Economic Review, pp. 1-30.

Kotabe, M. (1998, Nov). Efficiency vs effectiveness orientation of global sourcing strategy: A comparison of U.S. and Japanese multinational companies. The Academy of Management Executive, pp. 107-119.

Trent, R. J., & Monczka, R. M. (2005, Fall). Achieving excellence in global sourcing. MIT Sloan Management Review, pp. 24-32.