Developing the Sourcing Function: Towards Global Sourcing

Abstract

The study relates to the development of the sourcing function from international purchasing towards integrated global sourcing. Global sourcing is examined through the managerial and operational functions that can promote an organization’s efforts in pursuing common sourcing and purchasing procedures. The objective is first, to build a conceptual theoretical framework from the existing literature and previous studies for understanding and analyzing the global sourcing operations in multinational corporations. The theoretical findings will then be reflected to the empirical information collected from the case company. Through these findings the current sourcing systems and processes of the case company are modelled, as well as the targeted systems and processes. Development ideas are presented in order to achieve the company’s future goal of sourcing operations. Sourcing is presented as an important part of the value chain and supply chain management, which can significantly improve the company’s competitive advantage.

Purchasing process and activities are examined from the global sourcing point of view. This study emphasizes the importance of consistent purchasing procedures in pursuing successful global sourcing in the corporate level. The prevailing conditions of purchasing are reflected against the objective state and further development ideas are presented. The supplier selection and negotiations are made by global sourcing committee, as the agreements are corporation wide, long term contracts. The supply chain management is examined in general, so that the link between the whole supply chain and the procurement operations becomes evident. The make or buy decision is considered as an integral part of the sourcing process as well as the supply chain management. Notes about the importance of forecasting and intraorganizational communications are made from both operational and managerial point of view.