MGT 605 Global Sourcing

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The sourcing strategy that companies use to find the most profitable place to manufacture their products is called global sourcing. This place goes beyond the political boundaries of a manufacturing company, the world market. It takes advantage of global efficiency benefits such as cheap raw materials, cheap skilled labor, and economic factors such as low trade tariffs and tax incentives. If a shoe company in the United States finds that low wages for its employees in an emerging economy translates into low manufacturing and shipping costs, it may choose a foreign manufacturer.

As international demand for large quantities of high-quality products continues to grow, competition also intensifies. To make a profit, companies must keep pace with rapidly evolving technology, improving quality, reducing costs, and improving customer service at all levels of the value chain.

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