Global Sourcing : The Main Advantages Of Global Curcing

As early as the 1970s Mattel was manufacturing products in China in order to take advantage of lower costs and enable corporate resources to focus on establishing the brand. By 2007, nearly 65% of Mattel products were produced in China. Mattel used a combination of company-run plants and a network of contract manufacturers. Exhibit C displays a simplified example of Mattel’s supply chain after moving production to China. Global production obviously had major benefits for Mattel, the country factors of China gave it a comparative cost advantage over producing in the U.S., and outsourcing enabled Mattel to remain profitable in an increasingly competitive toy industry. However, outsourcing does have disadvantages, a global supply chain increases the challenges to regulate and enforce quality.

Global sourcing is an important aspect to a global business, as this can significantly decrease cost as well as have access to resources, technology and expertise overseas while increasing efficiency. However, the reliance on the supplier and the quality control of the outsourcing partner is potentially a threat to the businesses reputation and ability to succeed.

Many businesses in United States manufacture their product overseas. This involves manufacturing products outside United States where the labor cost is cheaper. Because of cheap labor, it is often more economical for a U.S. company to manufacture overseas and pay the shipping costs than to manufacture in the United States. For a company, the savings may be substantial. However, there are negative impacts on U.S. employment, as many jobs in the United States are being outsourced and replaced by overseas positions. The manufacturers outsource production projects to save time, money or resources. The manufacturing is outsourced so as to remain competitive and maintain a steady work flow. Without outsourcing, manufacturing costs could escalate to the point at which no product would sell and all employees would have no work. Outsourcing comes

The reason of the creating competitive pressure to firms is that which from the enhancing the quality but decreasing the price synchronously. The key of success is that the firms and organizations which treat “Global Sourcing” as a weapon fighting with its competitors.

The United States has an absolute advantage over the technological products and services which are critical. Within the global markets, the U.S has been able to provide tech products and services appropriately. However, it has comparative advantage of offering tech services while the absolute advantage exists in technology design and providing industrial capacity. The U.S is a major exporter in the international markets of products such as civilian aircraft, semiconductors, cars, car accessories, fuel oil, and organic chemicals among others. Such exports improve the U.S's comparative and absolute advantage.

The second advantage is the shared risks associated with outsourcing. If there are five different companies each producing one piece of an object or item to make a whole item, if something happens to one of the firms like filing for bankruptcy, the entire operation doesn’t suffer, only that one piece of the whole product. An example is a financial profile. I have in the Army what is called the Thrift Savings Program, like a civilian 401k. There are five different investment options and I elected to put 30% of my contributions into one fund, 30% in another, and then 40% in yet another. If one of those funds start going south, it is my hope that the other two compensate the first one.

Due to running our own manufacturing plant we are able to implement more strict quality standards. One of every ten products will be thoroughly inspected and one in every 1,000 will be real life tested to ensure that each batch comes out with equally great quality. Western Kicks upper management will also have annual meetings with suppliers to discuss quality expectations. Those meetings can happen more often if necessary and all supplies will be inspected before being used for a batch. If more than 1 in every 50 of an item have to be discarded or returned due to quality problems, a meeting must be held with the supplier as soon as business allows.

With globalization there are barriers to overcome, those being primarily communication and ideals. Quality production requires a careful at tentative eye from production workers, at all levels, as well as a system of checks and balances with quality assurance auditors.

The advantages I see from my company using domestic sourcing is we get shipments fast. When you have a patient with a broken frame, you want that frame as fast as possible. Many times if the lab has the frame the will have it the next day. Domestic sourcing is cheaper. Never really have a delay for the sourcing we use. Also, there are so many domestic sources to chose from, if I do not like one source I can easily switch to another. Some disadvantages I see from the company I use for domestic sourcing is boxes are smashed. Some patients have received broken glasses. We have received smashed boxes and broken frames. Quality of handle is not that great. It also seems customer service is lacking. I called one source and asked them about shipping

Although outsourcing is a contributor to mass production and a products supply and demand growth, it has also been known for some of the largest product recalls. “In the largest product recall in China in 2008, the baby formula of Sanlu (the largest company in the industry by volume was found to contain melamine originated from contaminated milk supply outsourced to local farmers.” (Lu, Ng, & Tao, 2012, p. 2). Lu, Ng, & Tao simplify the term outsourcing by expressing how “Outsourcing involves contracting with external suppliers for the delivery of parts and components with pre-specified quality levels.” (Lu, Ng, & Tao, 2012, p. 2). This is a clear indication that product quality is never fully tested when outsourcing. Quality controllers are given a general guideline to aby with, and once met the product may be produced. As a consumer there is nothing more important than a products quality and reputation. It would be ethically unfair to a consumer to save their hard earned money in

Economy: An expanding international commitment to free trade among countries has internationalized the market for goods; people have access to goods that were previously out of reach. Finally, in addition to the exchange of goods across borders, traders move billions of dollars daily with the click of a mouse. Some countries have been helped by the newly emerging economic order because they have the resources to expand production worldwide and to create goods that are in demand internationally. On the other hand, some countries and individuals have been hurt because they are not able to compete with the strongest producers internationally. The United States is one of the world's leading exporters and maintains a lead in many of the future's most promising industries, including biotechnology, space technology, and computer software. U.S. corporations have sought a competitive edge by taking advantage of cheap labor in Latin America and Asia.

Throughout this semester we have learned about global sourcing and why companies seek sourcing outside of their home country in our case, outside of the United States. Global sourcing arises numerous possibilities for a company including greater profit potential, better access to raw material, possible new international markets, and access to other financial resources. One of the top benefits of producing a product outside of U.S. is that it can be done at a lower cost.

The process of globalization has numerous significant effects on countries, organizations, and individuals. These effects can be observed in the quality of products, in their prices, but also in their availability. Because of globalization, numerous companies prefer to expand their business on international level. Some of them outsource some of their processes and activities to cheaper destinations that allow them to reduce their investments.

Labor costs in the United States are much higher than in many parts of the world. Consequently, the costs of production for labor-intensive manufacturing can be significantly reduced by moving factories overseas mainly to third world countries this is a common practice of Nike who outsource there manufacturing to other companies in countries such as Thailand and Indonesia.[ ]

Global companies source their raw materials and outsource manufacturing of their products to many countries to take advantage of lower costs or high quality production, and/or lower costs of