5 Benefits of Global Sourcing in Supply Chain Management
The importance of quality in supply chain management is undeniable. When the topic of global sourcing comes up, procurement managers often balk at global sourcing in supply chain management because they worry they will have to sacrifice quality or delivery when using global suppliers.
While it would be a bald-faced lie to say that hasn’t happened in some cases, sourcing and procurement in supply chain management demand that you always carefully vet your suppliers, whether they’re one town over or across the ocean.
The truth is that global sourcing benefits outweigh the risks for many spend categories, and it’s advantageous to think about the big picture of your sourcing steps. Read on to learn about the benefits.
What Is Supply Chain Management? Why Is It Important?
Supply chain management is the big picture, of which procurement is merely a piece. It refers to the beginning and end of a consumer needing a good or service and every step needed and undertaken to get that good to the consumer. This includes product development, sourcing, production, and logistics, and how the use of information technology in supply chain management is used in each step. It’s important because it provides a need to the end-user.
If you’re wondering, “Is sourcing part of the supply chain?” it most certainly is. Where you get goods from is an extremely important part, and how sourcing and supply chain management fit together is imperative.
The strategic supply management definition refers to all levels of the chain:
- Strategic
- Tactical
- Operational
When you drill down deeper, they all cover:
- Product development
- Customers
- Manufacturing
- Vendors
- Logistics
The 5 Benefits of Global Sourcing and Supply Chain Management
When companies use global sourcing in supply chain management, they often worry about reducing quality, but quite often, this is the opposite case. Just as with any other changes you make, if you begin to use global sourcing, you must always run analysis reports and look at your procurement indicators and KPIs.
If you realize that there has been a problem and global sourcing may be a root cause, it’s time to take a second look. However, you’ll likely find that you are reaping the benefits of global sourcing and supply chain management. Benefits include:
- Reduction in cost. Overseas suppliers often charge less money for their goods, so you’ll see an immediate reduction in spend.
- Innovative ideas. Interacting with new suppliers can bring fresh ideas to the table, which can help, particularly if your company has been in a rut as of late.
- Capacity. Many domestic suppliers can’t keep up with demand. Depending on your business’s nature, our post-COVID world has been demanding certain products, and domestic suppliers have been falling behind.
- Better quality. In actuality, many overseas suppliers provide better quality than some domestic suppliers. As always, vet new suppliers and take detailed notes about each one in your supply chain management cloud software.
- Less waste. Many overseas suppliers have become more eco-friendly and use sustainable products for shipping.
When you use global sourcing in supply chain management, you will interact with global suppliers just as you would domestic
ones when it comes to your sourcing steps. If you’re using an eTendering system, you would log in, post a need, be connected to suppliers based on your need, and vet one until you find the right one. The one thing to keep in mind is that global suppliers may require a longer lead time for certain products, so you have to start your sourcing process earlier than in the past to ensure that the goods reach the consumer on time.
To learn more about global sourcing and supply chain management or to hear about the many services we provide, contact EC Sourcing Group to schedule a demo today by calling 973-936-9672. We want to help you re-imagine procurement.