Week 5 - Global Sourcing

Question 1

What is global purchasing?

Answer 1

Is part of global supply chain management that refers to the functions associated with the worldwide buying of the goods, services, and/or information required by the multinational corporations

Question 2

What does global purchasing cover? (3)

Answer 2

• Worldwide management of a multinational corporation’s evolution from international to global purchasing
• Various types of purchasing strategies
• Global supplier selection

Question 3

5 levels of evolution from international to global purchasing

Answer 3

Domestic purchasing
Level 1 - Engage in domestic purchasing activities only
Level 2 - Engage in international purchasing activities as needed
International Purchasing
Level 3 - Engage in international purchasing activities as part of SCM strategy
Level 4 - Global purchasing activities integrated across worldwide locations
Global Purchasing
Level 5 - Global purchasing activities integrated across worldwide locations and functional groups

Question 4

How are headquarters involved in global purchasing? (3)

Answer 4

• Recommend standards and/or products
• Mandates standards and/or products
• Do the purchasing

Question 5

7 stages of the global supplier selection

Answer 5

• Identify - The main dimensions for global supplier selection
• Assign - Weights to the main dimensions for evaluation
• Identify - Sub dimensions for global supplier evaluation
• Assign - Weights to sub dimensions for evaluation
• Define - The scoring system for the main dimensions and sub-dimensions
• Evaluate - Each global supplier
• Make - The decision as to which global supplier to be selected

Question 6

Name competitive priorities related to global supplier selection (4)

Answer 6

• Cost
• Speed
• Quality
• Flexibility

Question 7

Name industry factors that influence global supplier selection (2)

Answer 7

• Industry globalisation drivers
• Security and risks

Question 8

Industry factors that influence global supplier selection

Answer 8

Global infrastructure

Question 9

Political factors linked to global industry and global infrastructure (7)

Answer 9

• Government policy
• Political stability
• Corruption
• Foreign trade policy
• Tax policy
• Labour Law
• Trade restrictions

Question 10

Economic factors linked to global industry and global infrastructure (6)

Answer 10

• Economic growth
• Exchange rates
• Interest rates
• Inflation rates
• Disposable income
• Unemployment rates

Question 11

Social factors linked to global industry and global infrastructure (7)

Answer 11

• Population growth rate
• Age distribution
• Career attitudes
• Safety emphasis
• Health consciousness
• Lifestyle attitudes
• Cultural barriers

Question 12

Technological factors linked to global industry and global infrastructure (6)

Answer 12

• Technology incentives
• Level of innovation
• Automation
• R&D activity
• Technological change
• Technological awareness

Question 13

Environmental factors linked to global industry and global infrastructure (5)

Answer 13

• Weather
• Climate
• Environmental policies
• Climate change
• Pressures from NGO’s

Question 14

Legal factors linked to global industry and global infrastructure (6)

Answer 14

• Discrimination laws
• Anti trust laws
• Employment laws
• Consumer protection laws
• Copyright and patent laws
• Health and safety laws

Question 15

Characteristics of successful purchasing in global supply chains (3)

Answer 15

• Develop mechanisms for creating understanding and alignment between the firm’s purchasing professionals and the C-suite executives
• Careful planning for the evolution from domestic to international to global purchasing
• Careful selection of global channels, order fulfilment and delivery options

Question 16

Critical success factors for purchasing in international or Global supply chains (8)

Answer 16

• Organisational support structure
• Executive commitment
• Organisational resource availability
• Information system and technology
• Well-defined global sourcing process
• Availability of global suppliers
• Performance measurement system
• Communication and coordination mechanisms

Question 17

11 factors that influence success in international and global sourcing

Answer 17

• Top management support
• Developing communication skills
• Establish long-term relationships
• Developing global sourcing skills
• Understanding global opportunities
• Knowledge of foreign business practises
• Foreign supplier certification and qualifications
• Planning for global sourcing
• Obtaining expert assistance
• Knowledge of exchange rates
• Use of third-party logistics services