Different Stages of a Global Sourcing Strategy

Sourcing products globally is basically a procurement strategy undergoing which an enterprise or organization works for identifying the most cost-effective manufacturing location of products. At this point, it simply does not matter for an organization if the location is set somewhere in any foreign country. Companies usually search for low-cost labor countries that also have a comparatively lower infrastructure. Such countries usually provide high-quality raw materials at the lowest possible rates for continuing the growth of businesses there. Having invested in global sourcing in that way can let an organization see lots of profits at the end of a year. It is observed nowadays that sourcing globally has resulted in having more benefits and satisfaction than domestic sourcing.

Stages of strategies that are currently followed by the market for sourcing products globally are considered the most authentic and crucial part of most organizations in the world. Sourcing in foreign countries usually has to go through different traveling phases which can affect an organization's cost. But it does not happen only because of the presence of several sourcing agents in the industry. The agents contribute a lot to their respective organizations and make sure procurement activities are all cost-effective.

Stages of Strategies for Sourcing Globally

The sourcing process is a bit lengthy and that is why it is divided into 5 connected stages. Read below to know in detail about them.

1.?????Preliminary Research – Investigation, and Tendering

The first stage has a lot to do with an enterprise. Here, an enterprise mainly identifies all core and non-core operational activities and competitors, and analyses the market and customer requirements. The entire idea revolves around developing prospective markets, business objectives, and brand positioning. These 3 factors are mainly developed by the sourcing specialist and the executive of an enterprise. Sourcing services around the world can always help you understand the importance and value of preliminary research for the betterment of your business.

2.?????Market and Supplier Evaluation

At this stage, an organization is highly responsible for creating a detailed list of supplier selection benchmarks. These benchmarks are usually used for selecting the most accurate suppliers that meet the requirements set by the industry. Once the finding process ends, the sourcing strategy may get tweaked further and a costing model will be released based on it. Then, the estimation of the operational and economic benefits of the project will take place, and accordingly, RFIs will be sent out to the shortlisted suppliers in a single go.

3.?????Selection of the Supplier (Sourcing Event)

After the RFI reaches the suppliers, a new, final list of selected suppliers is made, and accordingly, negotiation of products is carried out ideally while culminating in a supply agreement. Then a technical assessment program is conducted for the final selected suppliers to come up with an estimation of savings for each. At this stage, the last doing is to create an implementation schedule outlining timelines for various suppliers to help run every process related to procurement. Global sourcing needs both selection and training of the right suppliers.

4.?????Implementation

The implementation process is very important for sourcing products in foreign countries. A schedule of performance analysis should be developed and produced in time outlining all activities of this process. A procurement agent should constitute the implementation team in an enterprise and accordingly, publish the schedule and strategy. This stage is specially run for clear and proper documentation of both expected internal and external results from the suppliers' end. Alongside, reporting of actual performance, as well as periodic measurement, should be carried out giving equal importance to the theory.

5.?????Performance Monitoring

The performance of suppliers constantly remains under strict supervision both independently and with the processes and resources applied by supply partners. This is a kind of process that should be executed and reported in a scheduled manner. The partners here continuously isolate problems and find out ways to solve them for enhancing the performance of suppliers. The main objective of performance monitoring is to run and maintain the most efficient procurement process or activity that is exclusively dynamic and flexible. This process can easily adapt to a changing market environment which in turn can prove to be the best for sourcing services in an enterprise.

An ideal strategy for global sourcing addresses all functional elements that contribute greatly to an organization as well – cost, laws, lead time, currency, transportation, culture and language, and methods of payment. All these elements carry the same importance but play their respective roles in an organization, especially for sourcing products globally. Further, following the above-mentioned strategies will only do good for your enterprise while cutting out all the odds on your way to source. Most importantly, the entire strategy that is divided into 5 parts is completely organized for maintaining the standard and quality of sourcing in an organization.