What is Global Sourcing?

The  Global Sourcing  is a business strategy that involves buying goods or services in other countries where there are more advantageous factors for companies.

This type of outsourcing can be advantageous when low production costs are found elsewhere, generally where wages are lower or where productivity is higher.

The global sourcing process began to intensify with increasing globalization, where it was possible for companies to seek economic advantages beyond geopolitical territory.

Examples of global sourcing

Global Sourcing has a common history of importing grains and other commodities among companies based in countries with competitive advantages.

Another example of this technique can be considered the manufacturing demand in Chinese companies. Or, still, companies that need call center services in other countries.

A known aspect in some companies is the production of parts of a product in different countries, while the final assembly is carried out in the multinational’s country of origin.

Differences between Global Sourcing and Follow Sourcing

While Global Sourcing is a sourcing process for suppliers in other countries, Follow Sourcing is the strategy in which suppliers approach the company’s facility.

Follow Sourcing can be seen in the automotive industry, where suppliers are installed around the automaker, facilitating the company’s logistics process.

Advantages and disadvantages

Global Sourcing emerged as a search for the competitive advantage of companies, increasingly possible thanks to the economic opening of countries.

To obtain an advantageous operation, managers carefully analyze and plan all the factors involved in the contract, such as logistics costs, product quality, and bureaucracy.

This strategy may be subject to criticism for presenting advantages to companies, and possibly generating fewer jobs and products for the country.

Even so, within the reach of the national economy, it is possible to have advantages for consumers while the prices of the products are lower due to the lower costs provided by Global Sourcing.