Abstract
A global supply chain is a core element for an organization's competitiveness. Its success relies on the synchronization of relations, activities, and agreements in order to be flexible, agile, high quality, and cost effective for customers. Strategic sourcing emerges as an important factor to support and integrate the suppliers into the supply chain intelligently. This chapter aims to provide the understanding of how strategic sourcing can contribute to improving a firm's global supply chain competitiveness. In order to do so, it explores the elements to be considered while developing the strategic sourcing: the sourcing process cycle, internal and external relations, sourcing risks, global sourcing application, and supplier development.
TopWhat Is Strategic Sourcing?
Purchasing has been shifting its tactical role to a core element for strategy and competitiveness of organizations (Palraj et al., 2006; Tassabehji and Moorhouse, 2008). Sourcing strategy expands the intention of defining how one organization is supposed to buy in a manner that supports a firms’ profitability (Anderson & Katz, 1998). It means that purchasing activities extend the traditional, tactical procurement function to a more complex, sophisticated role, which includes the definition of long-term plans, alignment of purchasing and organizations’ competitive priorities, and support for global operations and supply chain strategies.
Key Terms in this Chapter
SLA (Service Level Agreement): Is an agreement between a suppler and a buyer that defines the level of service standards expected and the obligations of the supplier. It also presents the performance elements of the order placed, which can be compared with other suppliers and serve as an indicator of the efficiency and effectiveness of the business.
Spot Purchasing: Sporadic or unplanned orders originated in unexpected circumstances.