1. Towards a “balanced” global sourcing Prof. Corrado Cerruti Director Master in “Relationships with Eastern Countries” University of Macerata

2. Decision framework for global sourcing Adapted from Harrison & van Hoek – Logistics Management and Strategy

3. Global sourcing is driven by three major factors: - consolidating the purchasing of all company divisions from a unique/few suppliers - sourcing commodities items from low-wage economies - taking advantage of bulk transportation … however global sourcing needs to balance: - costs and risks/timeliness! - costs and market presence/innovation! Global sourcing

4. Path towards global sourcing Global integration development-sourcing-operations Spot international sourcing Only domestic sourcing Coordinated global sourcing decisions Systematic and strategic international sourcing

5. Cost vs. “responsiveness” international vs. domestic sourcing Cost advantages Balancing global sourcing operationally Disadvantages - Risk - Time Plus (even if at a higher cost) a second sourcing option

6. Balancing global sourcing strategically Sourcing Supply Chain Management Supply Chain Management Strategy Market response capability High Low Demand variability Low High Strategic fit Unrequired flexibility rigidity Unbearable

7. “Global sourcing” sourcing from Far East

8. The European perspective: balancing European production potential (including low cost sources in Eastern Europe) and the Asian market potential The Asian perspective: balancing Asian mass market potential and European market/innovation potential (in spite of higher European production costs) Towards a Europe/Asia partnership