What is International sourcing? What are reasons for & challenges on International sourcing?

International sourcing refers to those activities governing how components will be supplied for production as well as which production units will serve which specific markets.

REASONS FOR INTERNATIONAL SOURCING

To maintain growth or gain competitve adavantage over rivals.

To gain & maintain market share.

To improve product quality & design for international market.

To increase manufacturing flexibilty through introduction of components from different manufacturers.

Need to reduce on costs as a corporare strategy.

CHALLENGES OF INTERNATIONAL SOURCING

Adapting to different markets ie needs & wants

Cultural differences

Linguistic problems

Longer lead times

Hidden costs e.g import/export duties, transportation & administration costs

International sourcing is the practice of sourcing from the global market for goods and services across geopolitical boundaries. International sourcing often aims to exploit global efficiencies in the delivery of a product or service. These efficiencies include low cost skilled labor, low cost raw material and other economic factors like tax breaks and low trade tariffs. A large number of Information Technology projects and Services, including IS Applications and Mobile Apps and database services are outsourced globally to countries like Pakistan and India for more economical pricing.

The reasons for international sourcing are: learning how to do business in a potential market, tapping into skills or resources unavailable domestically, developing alternate supplier/vendor sources to stimulate competition, and increasing total supply capacity.

and the challenges in the are:hidden costs associated with different cultures and time zones, exposure to financial and political risks in countries with (often) emerging economies, increased risk of the loss of intellectual property, and increased monitoring costs relative to domestic supply. For manufactured goods, some key disadvantages include long lead times, the risk of port shutdowns interrupting supply, and the difficulty of monitoring product quality. (With regard to quality in the food industry)