Global sourcing Oct 6

Global sourcing Oct 6 - Global Sourcing October 6, 2010 1...

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1 Global Sourcing October 6, 2010
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2 Current Context “By late 2009, one out of 3 companies will have half or more of their supply bases outside their home markets”- Accenture “Raw material spend is attracting board level attention” – Ariba Crude oil; energy; chemicals; copper; corrugated containers (10 – 21% annual price increase) New York Times article (June 11, 2008) on how airlines are increasing fuel efficiency (lighter seats, less water, cleaning grime off engine etc). Fuel cost was 15% of total cost for airlines a decade ago is now 40% of total cost. Effect on Boeing’s Dreamliner 777 – projected 8% cost savings
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3 Current Context For US plants, material costs average about 50% of cost of goods sold – Industry Week, 2006 “Global sourcing dynamics are always changing, a good source today may not be so good 6 months from now” Thailand/India have become good sources for specialty items in the auto industry
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4 Current Context (Contd) Notion of Global Service Providers is gaining strength Retaining and developing supply chain talent in key markets is important Developing effective strategies for managing risk Integrating processes with low cost country suppliers is a priority
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5 Current Context (Contd) BRIC countries will get larger share of offshoring/outsourcing contracts Interesting tri-lateral sourcing arrangements Indian talent in financial services located in China for US Multi-national banks Sundaram Bolt and Fasteners factory located in China for worldwide sourcing to all the major auto OEMs Volvo India to be a strategic sourcing hub for high- value added items for Volvo’s global plant network
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Define Global Sourcing. How is it different from International
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Global sourcing Oct 6 - Global Sourcing October 6, 2010 1...

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