Material And Inventory Management



Material and inventory management

Antonio Johnson (First M. Last)

School or Institution Name (University at Place or Town, State)

Material and inventory management

Global sourcing can be referred to as a procurement strategy in which a business not only just buys product and services from an international location but it puts emphasis on improving quality and lowering the cost to gain efficiency on a worldwide basis ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"rDMoOkbr","properties":{"formattedCitation":"{\\rtf (\\uc0\\u8220{}Global Sourcing: Levels and risks | Supply Chain Resource Cooperative | NC State University,\\uc0\\u8221{} n.d.)}","plainCitation":"(“Global Sourcing: Levels and risks | Supply Chain Resource Cooperative | NC State University,” n.d.)"},"citationItems":[{"id":1497,"uris":["http://zotero.org/users/local/FGhKhGPG/items/A5DIACJ6"],"uri":["http://zotero.org/users/local/FGhKhGPG/items/A5DIACJ6"],"itemData":{"id":1497,"type":"webpage","title":"Global Sourcing: Levels and risks | Supply Chain Resource Cooperative | NC State University","URL":"https://scm.ncsu.edu/scm-articles/article/global-sourcing-levels-and-risks","accessed":{"date-parts":[["2019",4,8]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Global Sourcing: Levels and risks | Supply Chain Resource Cooperative | NC State University,” n.d.). Global sourcing enables an organization to tap opportunities and make programs available to worldwide dealers. Global sourcing is a complex process and it can involve many risks and challenges. In a global environment, sourcing from an offshore destination can encounter challenges such as lack of government support and unorthodox laws of a country. In this case, the lack of support can result in the burden of failure on the business itself. Another risk is the uncertainty of quality and changes in market needs and demands. If some technological changes occur or consumer preference fluctuate then it creates several problems for the organization. They cannot undo the purchase the made in case of inconsistent quality and changes in demand and preferences.

One more challenge associated with global sourcing is the difficulty to manage the outsourced functions as a result of the loss of control. Lack of vendor management increase the supply chain risk and results in disputes and litigations. Other challenges and risks of outsourcing from an offshore location are due to the cultural differences, differences in language, and barriers to deal with different time zones ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"lGdnxAI1","properties":{"formattedCitation":"(Herath & Kishore, 2009)","plainCitation":"(Herath & Kishore, 2009)"},"citationItems":[{"id":1500,"uris":["http://zotero.org/users/local/FGhKhGPG/items/Y8S4ZRN7"],"uri":["http://zotero.org/users/local/FGhKhGPG/items/Y8S4ZRN7"],"itemData":{"id":1500,"type":"article-journal","title":"Offshore outsourcing: risks, challenges, and potential solutions","container-title":"Information Systems Management","page":"312-326","volume":"26","issue":"4","author":[{"family":"Herath","given":"Tejaswini"},{"family":"Kishore","given":"Rajiv"}],"issued":{"date-parts":[["2009"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Herath & Kishore, 2009). Cultural and language barriers cause misunderstandings among the business partners and can disrupt business dealings. If the global supplier is very sensitive towards culture, little carelessness can impact business relations in a negative way. The difference in time zones impact the delivery time for products and overall supply chain operations get delayed.

One of the key areas on which managers must put the focus on is the consideration of culture and language differences since it can complicate simple business operations. Miscommunication due to cultural and language differences can be reduced by developing an understanding of the culture of the offshore location before initiating business deals. Managers have to be culturally sensitive to research on part of a country's culture, core values, and the way their business operations are done. It also involves keeping a track of their business holiday, time zones to help with the right scheduling of activities. Language barriers can be overcome by hiring a translator to have the right information and successful contracts and making use of local counsel for any legal understanding of contracts ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"ixftBuRZ","properties":{"formattedCitation":"{\\rtf (\\uc0\\u8220{}5 ways to minimize the risks of global sourcing,\\uc0\\u8221{} 2018)}","plainCitation":"(“5 ways to minimize the risks of global sourcing,” 2018)"},"citationItems":[{"id":1501,"uris":["http://zotero.org/users/local/FGhKhGPG/items/D3MCF6KW"],"uri":["http://zotero.org/users/local/FGhKhGPG/items/D3MCF6KW"],"itemData":{"id":1501,"type":"post-weblog","title":"5 ways to minimize the risks of global sourcing","container-title":"Trade Ready","abstract":"While global sourcing can save your business money, find out the risks of getting your products from global sources and what to do about them.","URL":"http://www.tradeready.ca/2018/fittskills-refresher/5-ways-minimize-risks-global-sourcing/","language":"en-US","issued":{"date-parts":[["2018",11,12]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“5 ways to minimize the risks of global sourcing,” 2018).

To avoid the risks of uncertainty, it is very important for the managers to give due care to the selection of vendors ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"Vuam99Vk","properties":{"formattedCitation":"(Herath & Kishore, 2009)","plainCitation":"(Herath & Kishore, 2009)"},"citationItems":[{"id":1500,"uris":["http://zotero.org/users/local/FGhKhGPG/items/Y8S4ZRN7"],"uri":["http://zotero.org/users/local/FGhKhGPG/items/Y8S4ZRN7"],"itemData":{"id":1500,"type":"article-journal","title":"Offshore outsourcing: risks, challenges, and potential solutions","container-title":"Information Systems Management","page":"312-326","volume":"26","issue":"4","author":[{"family":"Herath","given":"Tejaswini"},{"family":"Kishore","given":"Rajiv"}],"issued":{"date-parts":[["2009"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Herath & Kishore, 2009). The right process adopted for vendor section can reduce the risks of uncertainties if technology or customer demands change. Managers have to ensure that the vendor has the right skills and expertise needed and their skills are not outdated. An assessment of the vendor's ability and right IT skills is also crucial so that there is no need to look for new vendors in case or change in technology and customers increasing demands. Managers must ensure that they select the vendor with the right skills and abilities along with cultural compatibility. Studies have provided certain tools and criteria when it comes to the decision making of vendor evaluation and selection ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"RTdJ0Jd4","properties":{"formattedCitation":"(Herath & Kishore, 2009)","plainCitation":"(Herath & Kishore, 2009)"},"citationItems":[{"id":1500,"uris":["http://zotero.org/users/local/FGhKhGPG/items/Y8S4ZRN7"],"uri":["http://zotero.org/users/local/FGhKhGPG/items/Y8S4ZRN7"],"itemData":{"id":1500,"type":"article-journal","title":"Offshore outsourcing: risks, challenges, and potential solutions","container-title":"Information Systems Management","page":"312-326","volume":"26","issue":"4","author":[{"family":"Herath","given":"Tejaswini"},{"family":"Kishore","given":"Rajiv"}],"issued":{"date-parts":[["2009"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Herath & Kishore, 2009).

Global sourcing is a procurement strategy adopted by most of the bigger brands due to the strategic benefits that it offers. Speaking of some of them, one of the major benefits is the reduced hours of operations. Global sourcing saves a major asset and resource allocated on business operations, i.e. time. The presence of global service provider ensures that a business meets its deadlines. Another major benefit which stimulates companies towards global sourcing is the saving of production and operations cost. Global sourcing allows to get the products at a comparatively lower rate, this is the business case that companies outsource their operations to Asian countries to take benefit of low-cost labor. Foreign suppliers mostly offer competitive prices. It also allows a reduction in overhead prices and improves the financial position of the company that money is later invested in research and development and innovative projects and many other development activities.

Unavailability of various sources in the domestic market also encourages companies to look towards foreign suppliers ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"rc1dfXdG","properties":{"formattedCitation":"(Cho & Kang, 2001)","plainCitation":"(Cho & Kang, 2001)"},"citationItems":[{"id":1503,"uris":["http://zotero.org/users/local/FGhKhGPG/items/CUKX2G9M"],"uri":["http://zotero.org/users/local/FGhKhGPG/items/CUKX2G9M"],"itemData":{"id":1503,"type":"article-journal","title":"Benefits and challenges of global sourcing: perceptions of US apparel retail firms","container-title":"International marketing review","page":"542-561","volume":"18","issue":"5","author":[{"family":"Cho","given":"Jinsook"},{"family":"Kang","given":"Jikyeong"}],"issued":{"date-parts":[["2001"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Cho & Kang, 2001). Global sourcing also allows the businesses to take benefit of manufacturing capabilities not available in the domestic market. This benefit can be enjoyed in terms of high technology, quality good and services and raw materials that are not available in the local markets or available at a very high rate. Organizations must obtain advantage from Global sourcing opportunities to achieve competitive advantage in the long-run.

References

ADDIN ZOTERO_BIBL {"custom":[]} CSL_BIBLIOGRAPHY 5 ways to minimize the risks of global sourcing. (2018, November 12). Retrieved from Trade Ready website: http://www.tradeready.ca/2018/fittskills-refresher/5-ways-minimize-risks-global-sourcing/

Cho, J., & Kang, J. (2001). Benefits and challenges of global sourcing: perceptions of US apparel retail firms. International Marketing Review, 18(5), 542–561.

Global Sourcing: Levels and risks | Supply Chain Resource Cooperative | NC State University. (n.d.). Retrieved April 8, 2019, from https://scm.ncsu.edu/scm-articles/article/global-sourcing-levels-and-risks

Herath, T., & Kishore, R. (2009). Offshore outsourcing: risks, challenges, and potential solutions. Information Systems Management, 26(4), 312–326.