Advantages and disadvantages of global sourcing
Answers
(i) Low cost manufacturing
(ii) Tapping skills and resources that are not available in the home nation
(iii) Seeking the benefit of alternate suppliers
(iv) Utilizing an efficient supply chain management systems
(v) Learning global business skills
(vi) Meeting competition prudently and efficiently
Disadvantages of Global Sourcing:
Disadvantages of global sourcing philosophy are as follows:
(i) No exposure of international culture, traditions and beliefs
(ii) Hidden costs related to different time zones and languages
(iii) Financial and political risks associated with emerging economies
(iv) Risk of losing intellectual properties, patents and copyrights
(v) Long lead times
(vi) Labor problems and labor related issues
Answer:
A Skilled Workforce:
Every marketer wants skilled professionals to manufacture their products. Hiring an experienced professional will keep marketers free from all sorts of headaches. The workforce in countries like China, India, Taiwan, Vietnam, Indonesia, etc. are aware of the latest trends in production techniques. They also know how to implement these advanced manufacturing techniques in their operations. This enables them to manufacture products that conform to global quality standards. The presence of a skilled workforce and low labor charges in certain countries intrigue marketers to engage in sourcing activities in these nations.
Increased Production Capacity:
This is another major benefit of global sourcing. Because of huge investments in the manufacturing sectors in countries like China and India, the production capacity of these countries has increased manifold. Most of the sourcing destinations that organizations select have dedicated huge portions of their economy and investments towards manufacturing. These countries also have the technical labor force needed to run the manufacturing plants. The technical labor force of these countries also has a higher skill set when compared to the U.S.
By conducting sourcing activities in these nations, organizations can also increase their production capacity quite smoothly. This is particularly helpful in times of increasing consumer demand. Procurement outsourcing firms give effective suggestions to organizations regarding how to align their production operations with the spikes in consumer demand.
Infrastructure:
Countries with excellent infrastructure and superior transportation options catch the eyes of marketers. If a company decides to conduct its procurement activities in a destination that has excellent infrastructure, it is very likely to be benefited from shorter lead times. Marketers can get hold of the finished products within a short period.
Technology:
Huge investments are being made ensuring production plants are equipped with the most up-to-date technology in the world. Technology also has an important role to play when it comes to the quality standards of products. It is always recommended to select a sourcing destination where the condition of factories is good. Most factories in China, India, and Taiwan have dirt floors and leaking roofs. If this is the case, it is bound to affect the manufacturing operations of organizations. Though these countries are sourcing hotspots, they need to consider this aspect for staying ahead of the technology curve