What also contributes to today's popularity of strategic global sourcing might be the fact that, for years, many larger companies have had the wherewithal to operate complex and pricey import and export software systems. Conversely, today's technology has leveled the playing field for international trade, given that inexpensive Web-based systems, designed for simplicity and easier deployment, can now enable much smaller companies to engage in global sourcing with a wide range of suppliers.
The unstoppable march of the Internet and growth of online shopping mean that we are all operating in a new, electronic, real-time world (that is, the global village), with inherent visibility into important events. These new systems make it possible for a small retail company to engage, even if just once, with a supplier and still record a profitable and efficient transaction. This has brought about what some experts call "the great leap" in global sourcing—it is no longer the privilege of only a few giant companies; it is becoming a viable strategy for almost any company.
More and more organizations are using affordable and intuitive Web-based applications for a variety of supply chain activities, including procurement, order processing and financial flow coordination, and new product design. Businesses are also using such applications to manage transactions and inventory. The advent of Web-based technologies has given cross-channel teams the ability to interweave common and specialized knowledge, making collaboration easier and more seamless, and optimizing productivity.
Furthermore, data warehousing and analytical applications allow the information gleaned by one application within one company to be used productively by other applications or partnering organizations. These tools can go beyond information sharing to enable information analysis and decision making, and they can increasingly do so across platforms. This means that one department's or organization's choice of hardware, database, and operating system (OS) is no longer an impediment when these tools' outputs can be used by another department, which might run on a disparate system. This cross-functional sharing of knowledge and analysis makes true collaboration much more possible.
Coming back to the benefits of strategic sourcing, while traditional purchasing may benefit from information technology (IT) in terms of effectiveness, it cannot really leverage IT to the same degree that strategic sourcing does. Neither can traditional purchasing increase the visibility of the entire supply chain the way strategic sourcing can via true collaboration.
Historically, the purchasing department's ability to work with suppliers, communicate requirements, and negotiate pricing, quality, and delivery of goods and services has been driven by crude technology tools such as the telephone, the fax machine and, more recently, e-mails and enterprise applications (to a limited degree). But the use of the Internet and compatible software systems, backed by the commitment and trust among strategic partners, allows buyers and suppliers to share information and synchronize demand and supply from virtually any point in the supply chain network, and at any time. Again, potential benefits of this include shorter cycle times, increased inventory turns, and the enabling of purchasing personnel to eliminate low-value, mundane activities so that they can focus on more strategic issues.
Collaboration reveals more information about all the critical points in the supply chain given that when information from suppliers, manufacturers, distributors, retailers, and customers is available for analysis, visibility of the supply chain and opportunities for improvement is enhanced. Demand information, inventory status, capacity status, capacity plans, production schedules, promotion plans, shipment forecasts, and demand forecasts can all be shared and, ideally, accessed by all parties on a real-time, online basis. Expanded information sharing can lessen the upstream bullwhip effect and provide early problem detection, faster response, better contingency planning, and stronger relationships, all because of increased trust. In short, the need for supply chain integration is here, and the means now exist to address that need much more efficiently and cost-effectively.
In fact, collaborative supply chain networks may benefit their participants in many ways. For one, by identifying common goals shared by all participants in the supply chain, and by increasing their ability to efficiently reach those common goals, a company's own (and often conflicting) goals can also be pinpointed and resolved. It is needless to say that information sharing initiatives can increase profitability throughout the supply chain through cost reduction, demand augmentation, and better ability to respond quickly and accurately to market changes.
The unstoppable march of the Internet and growth of online shopping mean that we are all operating in a new, electronic, real-time world (that is, the global village), with inherent visibility into important events. These new systems make it possible for a small retail company to engage, even if just once, with a supplier and still record a profitable and efficient transaction. This has brought about what some experts call "the great leap" in global sourcing—it is no longer the privilege of only a few giant companies; it is becoming a viable strategy for almost any company.
More and more organizations are using affordable and intuitive Web-based applications for a variety of supply chain activities, including procurement, order processing and financial flow coordination, and new product design. Businesses are also using such applications to manage transactions and inventory. The advent of Web-based technologies has given cross-channel teams the ability to interweave common and specialized knowledge, making collaboration easier and more seamless, and optimizing productivity.
Furthermore, data warehousing and analytical applications allow the information gleaned by one application within one company to be used productively by other applications or partnering organizations. These tools can go beyond information sharing to enable information analysis and decision making, and they can increasingly do so across platforms. This means that one department's or organization's choice of hardware, database, and operating system (OS) is no longer an impediment when these tools' outputs can be used by another department, which might run on a disparate system. This cross-functional sharing of knowledge and analysis makes true collaboration much more possible.
Coming back to the benefits of strategic sourcing, while traditional purchasing may benefit from information technology (IT) in terms of effectiveness, it cannot really leverage IT to the same degree that strategic sourcing does. Neither can traditional purchasing increase the visibility of the entire supply chain the way strategic sourcing can via true collaboration.
Historically, the purchasing department's ability to work with suppliers, communicate requirements, and negotiate pricing, quality, and delivery of goods and services has been driven by crude technology tools such as the telephone, the fax machine and, more recently, e-mails and enterprise applications (to a limited degree). But the use of the Internet and compatible software systems, backed by the commitment and trust among strategic partners, allows buyers and suppliers to share information and synchronize demand and supply from virtually any point in the supply chain network, and at any time. Again, potential benefits of this include shorter cycle times, increased inventory turns, and the enabling of purchasing personnel to eliminate low-value, mundane activities so that they can focus on more strategic issues.
Collaboration reveals more information about all the critical points in the supply chain given that when information from suppliers, manufacturers, distributors, retailers, and customers is available for analysis, visibility of the supply chain and opportunities for improvement is enhanced. Demand information, inventory status, capacity status, capacity plans, production schedules, promotion plans, shipment forecasts, and demand forecasts can all be shared and, ideally, accessed by all parties on a real-time, online basis. Expanded information sharing can lessen the upstream bullwhip effect and provide early problem detection, faster response, better contingency planning, and stronger relationships, all because of increased trust. In short, the need for supply chain integration is here, and the means now exist to address that need much more efficiently and cost-effectively.
In fact, collaborative supply chain networks may benefit their participants in many ways. For one, by identifying common goals shared by all participants in the supply chain, and by increasing their ability to efficiently reach those common goals, a company's own (and often conflicting) goals can also be pinpointed and resolved. It is needless to say that information sharing initiatives can increase profitability throughout the supply chain through cost reduction, demand augmentation, and better ability to respond quickly and accurately to market changes.
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