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GLOBAL SOURCING &

BUSINESS DEVELOPMENT

ASSIGNMENT

SUBMITTED BY:

RIPANU SURIN

SEC-G

A1802011043

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IF YOU ARE NOT GREEN AND GROWING, THEN YOU ARE RED AND ROTTING

Global sourcing is the practice ofsourcing from the global market for goods and servicesacross geopoliticalboundaries. Global sourcing often aims to exploit global efficiencies in the

delivery of a product or service. These efficiencies include low cost skilled labor, low cost raw

material and other economic factors like tax breaks and low trade tariffs.

In other words global sourcing is defined as a centralized procurement strategy of a international

consortium, whereby a central buying organization strives to create economies of scale through

corporate wide standardization and benchmarking. A definition focused on this aspect of global

sourcing is: "proactively integrating and coordinating common items and materials, processes,

designs, technologies, and suppliers across worldwide purchasing, engineering, and operating

locations.

A progression occurs from domestic purchasing to international purchasing and then finally to

global sourcing, this progression can be seen as a movement through 5 different levels namely:

Domestic purchasing only; international purchasing only as needed; international purchasing as

part of a sourcing strategy; global sourcing strategies integrated across worldwide locations;

global sourcing strategies integrated across worldwide locations and functional groups.

Life is constantly changing to meet societal demands. If you are not green and growing, then you

are red and rotting. Technology has changed and will continue to change the way we live and

work. Stopping the development and acceptance of technology is like trying to stop the world

from revolvingit is an exercise in futility.

The globalization of industries and the accompanying changes in the structure of competition

have forced many MNCs to adopt a global sourcing strategy. Strategic competitive advantage is

about being better than your competitors in terms of the things or services that your customers or

markets want from their specific global market.

The main impulse for global sourcing is the access to competencies, resource availability and

costs benefits. Over the last decade global sourcing has major impact on information technologyin terms of software development. The development processes of large enterprises are distributed

among comparatively lower wages locations and organizations. Besides cost-effectiveness theneed to achieve efficient system performance, reduce the risk and time to market in today's

integrated comprehensive market, software development is considered a globally sourcedcommodity. It has also facilitated the use of well-educated and technically competent software

engineers of lower wages countries from Eastern Europe, South Asia and Latin America etc.

http://en.wikipedia.org/wiki/Sourcinghttp://en.wikipedia.org/wiki/Geopoliticalhttp://en.wikipedia.org/wiki/Geopoliticalhttp://en.wikipedia.org/wiki/Sourcing

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Global sourcing has significant involvements of interactive people, organizations and technology

across nations with different backgrounds, languages, cultures and working styles. It increases

the interaction and relationship between individuals and groups which helps to solve complexissues in efficient way.

Adopting global sourcing offers organizations very promising benefits:

Cost Saving; the primary benefit of global sourcing is lower cost of wages. Thesystem development cost in USA, Canada and most European countries are higher

than Eastern Europe or Asian countries. Access to multi-skilled workforces; opens the possibility to hire skillful and

knowledgeable engineers. Companies have the opportunity to expand their software

development activities to contribution of large skill works, wherever they may

located. It also enables to create a virtual cooperation or virtual teams across thenation.

Reduced time to market; has ability to use time zone differences to achieve "followthe sun" approach described detail by Carmel. It enables organizations to maximizethe productivity by use of multination resources which aid to improve the time tomarket.

Improve quality; sharing best practices business organizations can get the high qualityof product.

Contiguity to market and customer; global software development allow developsoftware close to their customer and to increase the knowledge of local market. For

example an embedded system software development company focused on largemanufacturing industry based in China or ERP system development company focus

on the new market in India.

Global Sourcing Example

1. The picture below shows a simple example of global sourcing in action. In this example,application support has been outsourced to a service provider with near shore and

offshore facilities. The objective of this engagement is to reduce IT costs withoutcompromising support quality. A secondary desire is to insulate business users from the

logistics of the global sourcing relationship. To accomplish this goal, work assignments

are partitioned across all three facilities. The onsite team consists of the project's

managers and its subject matter experts. They are responsible for the client interface,capturing requirements, creating specifications and the final integration and deployment

of project deliverables. Located in an adjacent time zone, a near shore facility in Canadahandles telephone support, immediate fixes and other high priority tasks. It performs the

first level of work product integration and conducts system testing. To reduce costs, thebulk of programming and routine support assignments are performed in the facility in

India.

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2. Wal-Mart has been actively pursuing a strategy that emphasizes global sourcing. Forexample, Wal-Mart identifies common products used throughout the world and

determines whether there is an opportunity to improve quality, reduce costs and, byworking with a best-in-class supplier, achieve better replenishment and new item

introductions. For instance, Wal-Mart has worked with its copy-paper sales supplier to

offer new products and more value to customers throughout the world. By actively

working with these suppliers, Wal-Mart has realized sales increases of 46 percent in

England, 94 percent in Germany, 38 percent in Canada, and 25 percent in U.S. discount

stores, and a 13 percent increase at Sams Club stores.