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White Paper - Global Sourcing
The practice of purchasing products or materials from abroad is frequently referred to as Global Sourcing or International Sourcing. Purchasing abroad can benefit companies in many ways, for example: reducing costs, spurring efficiency in non-competitive local markets, accessing technologies not available domestically, or reducing dependency on a limited domestic supplier base.

While global sourcing can bring numerous advantages to a company, purchasing abroad also involves many different types of risks, for instance:
  • Political, e.g., new tariffs or quotas on imported goods
  • Operational, e.g., goods arrive late or damaged
  • Financial, e.g., currency exchange rate fluctuations
  • Personal, e.g., company representative gets kidnapped and held for ransom on a trip abroad
  • Cultural, e.g., negotiations fail due to an unintentional insult.
These "global" risks compound the many challenges associated with any outsourcing endeavor.

In evaluating the various benefits and risks of global sourcing, companies often forego excellent opportunities because they lack the knowledge and experience to bring good ideas to fruition while simultaneously controlling the risks involved. At Norbridge, we help clients evaluate and carry out global sourcing initiatives that maximize the benefits and minimize the risks of purchasing abroad. We have synthesized much of our research and advice into our Guide to Global Sourcing, a compilation of both our experiences and the experiences of companies who have had either successful or failed experiences buying abroad.

The Guide to Global Sourcing
The potential benefits of global sourcing are immense. Some firms are utilizing global resources to their fullest potential, while others are lagging behind in exploring global opportunities. The purpose of the Guide is to facilitate the development of international sourcing and enable managers who have little or no experience in this subject to make well-informed decisions about the opportunities available to them. The Guide provides readers with the tools and knowledge they need, and a systematic process they can use to identify, explore, and implement opportunities that exist in the global marketplace.

In creating this Guide, we explored a variety of sources in addition to our own internal expertise in global sourcing. To obtain a complete perspective, we interviewed purchasing professionals and academic specialists in numerous industries and integrated their expertise on global sourcing into our Guide.
At Norbridge, we see global sourcing as a two-phase process. In the first phase, users identify and evaluate opportunities that exist in their commodity areas. In the second phase, they organize the purchasing process to take advantage of these opportunities. The Guide is structured around these two phases.

Phase I - Screening for Global Sourcing Opportunities During this phase the reader is guided through the 8 steps of the initial screening for global opportunities that exist in a specific company. These steps are: Step 1: Identifying Target Opportunities Step 2: Identifying Countries of Supply and Suppliers Step 3: Finding and Using an Agent/Broker Step 4: Performing the Financial Analysis Step 5: Assessing Impact on Local Suppliers Step 6: Identifying and Managing Risk Step 7: Deciding on Feasibility and Documenting Your Decision Step 8: Reviewing to Assess the Impact of Currency Fluctuation Phase II - The Global Purchasing Process In the second part of the Guide, we address the four key areas that differentiate global purchasing from domestic purchasing: Requirements Planning Contracting Administration Material Logistics Each of the above areas is, in turn, subdivided into sections, each dealing with a specific issue or problem. Special Features While the Guide contains charts, graphs, worksheet, tables, glossaries, and case examples which enable readers to use this document as a tool, rather than just an information source. In almost every step, readers have at their disposal worksheets, questionnaires, or lists of sources that will enable them to complete that specific task. For example, in the step on identifying potential opportunities, buyers can go through an exercise to evaluate market competitiveness; in the step on financial analysis, buyers can utilize two worksheets to calculate the total cost of each option available to them; and in the section on risk management, buyers can examine a sample risk management plan and a framework for developing risk-management plans for their specific situations. Conclusion The Guide can be used as a textbook to give a purchasing manager a clear understanding of how to approach the issue of global sourcing. But the Guide can also be used as a step-by-step manual, consulted at every step of a real-time initiative. For this purpose, the Guide includes a comprehensive checklist, so that nothing is accidentally forgotten or omitted.

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