APPROACHES TO MANAGING GLOBAL SOURCING RISK
In globalization ever more efficient transportation and logistics has driven the outsourcing of manufacturing to, and sourcing of parts and goods from, distant regions to reap the benefits of lower sourcing and production costs. This has been managed by developing global supply chain management.But with its inherent complexity a global supply chain is at risk from many potential issues that could disrupt the chain. Risk must therefore be mitigated as far as possible at both a strategic and tactical level in order to reap the continued rewards of global sourcing. Many companies fail to do this when initially expanding their supply chains.
They look at the rewards of sourcing from new regions and increase the complexity of their chains without paying sufficient attention to the risks involved. In today’s more volatile business climate companies are lack of the resilience in their global supply chains and are more vulnerable to failure, now more than ever .A report which published in the mid‐2008 by analysts, the Aberdeen Group, found that over the preceding year, some 58% of companies suffered financial losses as a result of supply chain disruptions. The ‘bestin class’ firms were those that had adopted a more holistic view of supply chain risk and improved their supply chain processes and infrastructure in order to be better positioned to foresee, spot and respond to potential disruptions.
In the journal we choose begins by reviewing the literature on global supply chain risk and global sourcing risk, including a discussion on risk mitigation strategies. The journal also followed by a number of case studies and the results of the cross-case analysis. Finally the journal included, a discussion on the implications of the results, the conclusions reached and recommendations for further research are presented.
2.0:RESEARCH PURPOSE AND OBJECTIVES
* To understand how managers consider global sourcing risks across the entire supply chain and what actions they take to mitigate those risks. * To learn what are the stretagies used to manage global sourcing risk * To learn how organisations are exposed to supply chain risks * To analyse how organisations involved in global supply chains operate in a more complex and uncertain environment which increase their risk profile for a variety of reasons * To learn how companies need to adopt supply chain risk management strategies * To review te benefits and risk of global sourcing
3.0:INTERNATIONAL MANAGEMENT ISSUES
In retail company, the process of decision making in global sourcing called supply management. Supply management improves in business planning to enables company to assess risks internally and in the wider network. Company can monitor on supplier’s capability such as time of delivering, particular risks disaster or terrorist threats. This strategy may reduce supply risk of company. In fashion retail and wholesale, company uses critical paths and process mapping to identify and manage risks. Through this techniques may identify how the risk could be and what actions should be taken to implicate.Companies may identify new network design supplier to help in generating new ideas and impactful solution .This strategy may reduce supply risk because there will be more alternative to solve the problem. For consumer electronics there is a procurement risk management (PRM) organization which help in setting guidelines and provide training for manufacturing and logistic organizations’ when dealing with suppliers. PRM is more in corrective actions according to the monitoring process and reviewing agreements. Besides that, there are several departments responsible for managing the risk process when making global sourcing decisions. For example, manufacturing function responsible in manage manufacturers contract, logistic function manage 3PLs and procurement function manage other...
References: Christopher.M,Mena.C,Khan.O,Yurt.O, (2011),"Approaches to managing global sourcing risk", Supply Chain Management: An International Journal, Vol. 16 Iss: 2 pp. 67
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Nesta,”Critical path management”Scotland
Mitigating risk in the global supply chain
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