Strategic Global Sourcing

Due to the globalization process and the intense competition worldwide together with the more critical consumers for products, many companies are extending their business abroad to take advantage of capabilities owned by foreign countries, either for survival or for sustaining competitive advantage. Since the items purchased by companies usually form a large percentage of the total cost, global sourcing becomes one of the most salient activities performed by many firms. Outsourcing becomes an important means in global business. Companies use outsourcing to keep their core competitive activities in-house and procure non-core competitive items from independent suppliers. Purchasing activity has changed from a functional activity into a strategic choice. In the mean time, global sourcing strategy also becomes an inseparable part of the business strategy. Global sourcing can contribute to the business strategy by taking advantage of the capabilities of foreign suppliers and establishing relationships with suppliers.As a first step in establishing relationships with suppliers, supplier selection is a critical element in global sourcing. In this thesis, supplier selection criteria are analyzed from the perspective of competitive strategy, namely, cost-leadership strategy and product differentiation strategy. Portfolio approach is widely used in supplier relationship management and strategic purchasing management However, there is still not a portfolio approach that can be used in supplier selection. To fill this gap, a new portfolio approach is developed in this thesis. Through the portfolio method, it is concluded that buyers with different strategies have different emphasis on various suppliers' capabilities.Automobile industry is one of the most developed industries in implementing global sourcing strategy. This industry is considered to be a benchmark in global sourcing strategy, including supplier selection. Therefore, in the latter part of this thesis, global sourcing activities in auto industry are analyzed. As an empirical case,...