The contribution of global sourcing to the economic performance of organizations: Analysis of the points of view of the supply chain participants
Piloter la performance fournisseurs pour sécuriser sa logistique. Supply Chain Magazine
2013-0953
The Contribution of Global Sourcing to the Economic Performance of Organizations: Analysis of the Points of View of the Supply Chain Participants
Nouha Lahiani 2
Kouami Seli Apedome 1
Joelle Zhu 0
0 École Supérieure de Commerce Extérieure de Paris , France
1 Université d'Ottawa , Canada
2 Paris Diderot University , France
Purpose: This paper aims at investigating the reasons for the complex and long lead time from global suppliers that causes inventory shortages. It focuses on supply chain risk management in global sourcing. This study has revealed all the specific risks of a global sourcing project and has provided some solutions for risk management: three-step risk management, safety stock, data sharing and driving supplier performance. Design/methodology/approach: A qualitative study is conducted to propose concrete recommendations on three topics: risk management, safety stock and information sharing. A semistructured survey-guided interview was used to collect related data, and the answers were assessed using syntactic, lexical, thematical and NVivo software analysis. Findings: This study has revealed all the specific risks of a global sourcing project and has provided some solutions for risk management: three-step risk management, safety stock, data sharing and driving supplier performance. Originality/value: Through research work, we have noticed that the world of the Supply Chain is constantly evolving and that it is becoming more and more complex. Through these interviews, we have noticed that the role of purchasing is changing differently in each sector.
risk management; global sourcing; replenishment; lead time; inventory shortages
1. Introduction
In the current business environment, manufacturing companies should be increasingly competitive and flexible
(Lahiani, Hani, Triki & El Mhamedi, 2014). Therefore, a growing number of companies are working with Asian
suppliers in order to take advantage of cost reduction in the purchase of raw materials, components, subassemblies
and products, especially compared to the French market in which labour costs are comparatively high
(Hubert,
2013; Babai, 2005)
. Several companies have been trying to improve their competitiveness by implementing a global
sourcing strategy (Ivanov, Tsipoulanidis & Schönberger, 2017). However, this approach does not seem to be fully
effective, as the long lead time from overseas manufacturers involved in global sourcing risks causing potential
inventory shortages. Moreover, this context leads to a complexity of replenishment flows and heightened need for
risk management in supply chains.
This study is concerned with the risk mitigation strategies for long inventory shortages by controlling the
replenishment of flows. First, long inventory shortages due to poor risk management of distant supply flows
requires control of replenishment flows. This flow management is based on an accurate sharing of information
between the various stakeholders of a supply chain. To provide recommendations, we surveyed eleven companies
that work with global suppliers without difficulties in inventory management.
We focus on the risk management in global sourcing: how to identify and reduce risks. This study aims to
investigate the complex and long lead time from global suppliers, causing inventory shortages. It will focus on risk
management in global-sourcing supply chain. The evolution and complexity of supply chain management will be
analysed. The current issues faced by all French companies in global sourcing will be studied.
While global sourcing is considered to be a leading competitive advantage, it is also associated with risk factors such
as cultural differences, global communication and high inventory levels (Portioli-Staudacher & Tantardini, 2009).
2. Related Literature Review
This study supplements the existing body of research dedicated to risk management in global sourcing. It also
provides solutions for inventory reduction in global sourcing. Few authors focus on inventory shortages because
despite the abundance of data, there is a long lead time between two orders. Existing solutions focus on better
stock management in the global sourcing context. The goal is to find a balance to avoid both stock shortages and
excess inventory. The analysis of replenishment flows is presented in the first part and the risk prevention in distant
supply in the second.
2.1 Analysis of Procurements Flows
Procurement processes take place at the upstream of the company’s business: they represent the way to purchase
goods and services from the suppliers for storage and use in production and for sale of final products. The concept
consists of placing orders to replenish inventory according to demand (Hubert, 2013). Its role is to organize, plan
and control all inventories, plan replenishment orders and determine quantities and stock management.
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