Cost of Global Sourcing • Currency Exchange Rates • Organizational and Behavioural Issues • Export Administration Regulations • Foreign Trade Zone. Now that the team has been developedand has been introduced to the global sourcing concept including the clinical and financial benefits it can provide your organization, it is time to gain strategy acceptance.Building strategic consensus Timeline tracking documents laying out every step that needs to be completed and by whom are important for an efficient program launch. May 08, 2019  For several years, Walmart has published an annual summary of our efforts to build and refine our Global Ethics and Compliance Program. We’ve made several improvements to our programs over the years, and I’d like to highlight three areas that really stand out: responsible sourcing, safety and anti-corruption. Sourcing Responsibly.

1. Global Sourcing Definition

If you pride yourself on your planning and problem-solving, browse our list of the Best Logistics and Supply Chain Management Degrees.

“Supply chain” refers to the steps a company takes to transform raw materials into a final product that is delivered to customers. Supply chain management typically covers five stages: plan, make, source, deliver, and return.

Every step of this process requires analytical problem-solvers with a unique understanding of the supply chain. That’s where you come in! Earning a Logistics and Supply Chain Management degree will prepare you to efficiently plan and manage a supply chain. Learn the tools you’ll need to run a supply chain better, faster, and more cost-effectively.

What kind of Logistics and Supply Chain Management degree should you get?

A bachelor’s degree will prepare you for most careers in Logistics and Supply Chain Management. Depending on the position and level of responsibility, some employers may require a master’s degree. Either way, earning your bachelor’s degree is a necessary first step.

You can earn a degree in logistics and supply chain management, or you can pursue a business degree with a supply chain management concentration. Both degree paths are beneficial, and we’ve provided a mix of both options on this list.

If you’d prefer to earn your degree online, visit our list of the Best Online Bachelor’s in Logistics and Supply Chain Management Degrees.

How much money do people make with a Logistics and Supply Chain Management degree?

Logistics and Supply Chain Management is a broad field with a variety of careers. Below, we’ll look at the median salaries for a few related careers (per the Bureau of Labor Statistics).

• Logistician: $74,590
• Operations Research Analyst: $81,390
• Transportation, Storage, and Distribution Manager: $92,460
• Industrial Production Managers: $100,580

These careers are projected to grow faster than average. Supply chain management is recognized as one of the hottest job tracks in U.S. News & World Report’s Best Jobs of the Future issue.

What can you do with a degree in Logistics and Supply Chain Management?

A degree in Logistics and Supply Chain Management prepares you to work for a consulting, manufacturing, or logistics company. You’ll likely start as an analyst or project manager.

The top five industries employing logisticians are the federal government, aerospace product and parts manufacturing, transportation equipment manufacturing, general manufacturing, and professional, scientific, and technical services.

However, an efficient supply chain is essential for most businesses. This means that a background in logistics and supply chain management will make you a desirable candidate in a wide variety of industries.

What are the requirements for a degree in Logistics and Supply Chain Management?

Most Logistics and Supply Chain Management degrees require 120-credit hours to complete. You may also need to complete an internship or practicum. Other programs may require you to complete real-world projects to gain hands-on experience.

Many programs also require students to take introductory coursework in business. This may include courses on accounting, finances, business communication, marketing, human resources, and more.

What are the best Logistics and Supply Chain Management degrees?

Below, we’ve listed the best Logistics and Supply Chain Management degrees available. To choose the best, we consider criteria such as school reputation, tuition, and overall return on investment. Each program on this list is accredited. That means they’ve successfully undergone an extensive review process to meet academic criteria.

Our information comes from trusted sources like:

• PayScale
• Bureau of Labor Statistics
• Princeton Review
• U.S. News and World Report
• Official college and university websites

The Logistics and Supply Chain Management degrees listed here will give you the tools to succeed in the hyper-competitive global market.

2018 Ranking

See our rankings methodology page.

Overview

Founded in 1865, Lehigh University is a private research university in Bethlehem, Pennsylvania. The university provides a rigorous academic community for over 7,000 students. Lehigh boasts over 100 majors and degree programs, as well as more than 20 interdisciplinary programs spanning multiple colleges. Ninety-six percent of graduates are employed or in graduate school within six months of graduation. The average starting salary for graduates is $61,000. Lehigh offers a Supply Chain Management major.

Program Features

The Supply Chain Management major emphasizes advanced cost analysis, negotiation, product development, and e-business. Students study supply management, logistics, cost and risk management, and operations management topics. This innovative program integrates core business courses with supply chain major coursework. The 18 credits of required major courses include:

• Supply, Cost, and Risk Management
• Negotiations and Conflict Management
• Integrated Logistics and Transportation Management
• e-Business Enterprise Applications
• Integrated Product Development

Notables

Lehigh’s Supply Chain Management major includes an optional internship or experiential project. Students also develop cross-functional team skills by working with engineering students in the Integrated Product Development program. Graduates typically work in purchasing and supply management, transportation and logistics, operations management, inventory management and control, or demand and supply chain planning.

Overview

Embry-Riddle Aeronautical University has residential campuses in Daytona Beach, Florida and Prescott, Arizona. In 1971, the school also became one of the first to offer distance learning. Embry-Riddle Online and the school’s Worldwide campus feature state-of-the-art technology delivering flexible learning opportunities. The private, not-for-profit institution is recognized as one of the nation’s best colleges by U.S. News and World Report. It offers a BS in Logistics and Supply Chain Management.

Program Features

Measurement and instrumentation by bakshi free ebook download. Embry-Riddle’s Bachelor of Science in Logistics and Supply Chain Management can be earned online or in person. The 120-credit program trains students in the concepts and competencies central to best practices, regulations, and professional ethics. Topics include warehousing, distribution, transportation operations, inventory management methods, purchasing and procurement, and metrics for tracking and analyzing supply chain performance. Students take courses like:

• Principles of Purchasing
• Advanced Professional Logistics
• Management of Air Cargo
• Transportation Science
• Principles of Supply Chain Management

Notables

Embry-Riddle Logistics and Supply Chain Management graduates are in high demand. The program prepares students to distinguish themselves as leaders in the field or to pursue graduate studies. To complete the program, students must take a comprehensive exam in Strategic Management.

Overview

Michigan State is a public research university in East Lansing, Michigan. It was founded in 1855 as the prototype for land-grant universities. MSU is a nationally ranked university and a Best Value college. In addition, it’s known as one of the world’s top research universities. Twenty-five of the school’s degree programs are ranked in the top 20 nationally by U.S. News and World Report. MSU offers over 200 academic programs, including a BA in Supply Chain Management.

Program Features

MSU’s Bachelor of Arts in Supply Chain Management is a 120-credit program. It focuses on value-adding components from manufacturing operations, purchasing, transportation, and physical distribution that are critical to the enhancement of global competitiveness. Students develop the skill needed to plan and control value-creating processes in both private and public enterprises. Required courses include:

• Procurement and Supply Management
• Manufacturing Planning and Control
• Logistics and Transportation Management
• Supply Chain Application and Policy
• Supply Chain Industry Applications

Notables

Students may select concentration such as physical distribution system design and administration, purchasing techniques and strategies, computer integrated manufacturing, and manufacturing strategies. In addition to supply chain management coursework, students take a variety of courses from the MSU business core.

Overview

The University of Illinois at Urbana-Champaign is a public research university in Champaign County, Illinois. The school was founded as a land-grant institution in 1867. It is ranked as the number 13 public university in the nation by U.S. News and World Report. The university offers programs in more than 150 fields of study. The Gies College of Business provides a major in Supply Chain Management.

Program Features

The rigorous Supply Chain Management program spans processes such as procurement, purchasing, plant and transportation logistics, demand fulfillment, and promotion management. Curricular and practical training prepare students to effectively manage the supply chain in global and hyper-competitive environments. In this program, expect to take courses such as:

• Marketing to Business and Government
• Purchasing and Supply Chain Management
• Supply Chain Management Basics
• Information Technology for Networked Organizations
• Logistics Management

Notables

Students are required to complete a summer internship before graduating. Students must fill out an application and interview with faculty to ensure that Supply Chain Management is the right fit. This selective program has been very successful in training and placing undergraduate students. Graduates work for consulting, manufacturing, and logistics companies as analysts and project managers.

Overview

A private university in Bellevue, Nebraska, Bellevue University is a non-profit institution founded in 1966. BU is accredited by the Higher Learning Commission. It’s routinely recognized as one of the nation’s top military-friendly universities. The university offers flexible, rigorous majors and degree programs both online and on campus. Programs receive input from area businesses to ensure students develop the skills employers seek. BU offers a BS in Supply Chain and Logistics Management.

Program Features

BU’s 127-credit Bachelor of Science in Supply Chain and Logistics Management covers leading-edge supply chain strategies. Hands-on, applied learning is integrated with theory on topics such as global sourcing, supplier, and inventory management; demand planning and order fulfillment; quality management; relevant information systems and technology; international trade regulations and global logistics; and types of supply chains. Coursework includes:

• Transnational Marketing Strategies
• Supply Chain Sourcing
• Supply Chain Management Strategies
• Global Logistics Management
• Global Procurement and Strategic Sourcing

Notables

To help students build a well-rounded skill set, the Supply Chain and Logistics Management degree program incorporates foundational knowledge in several related disciplines, including accounting, economics, finance, information systems, and management.

Overview

Recognized by U.S. News and World Report as the nation’s most innovative school, Arizona State boasts over 40 programs ranked in the top 20 in the United States. The public university is based in Tempe, Arizona. It has four campuses across the Phoenix metropolitan area and four regional learning centers throughout the state. ASU is nationally ranked for its affordability and for producing some of the country’s best-qualified graduates. The university offers a business degree in Supply Chain Management.

Program Features

The W.P. Carey business degree in Supply Chain Management develops skills and expertise critical to the success of industries around the world. Students learn how to build and maintain an efficient and effective supply chain. Graduates can immediately take on leadership roles as supply chain managers or consultants. In this program, students take courses like:

• Business Decision Models
• Global Supply Operations
• Logistics Management
• Marketing and Business Performance
• Quality Management and Measurement

Notables

The Supply Chain Management degree is one of the top-ranked programs at ASU. Students have plentiful opportunities to apply and diversify their degree through undergraduate research, internships, targeted career programs, and organizations like the Supply Chain Management Association.

Global Sourcing Definition

Overview

Founded in 1883, the University of Texas at Austin is the flagship institution of the University of Texas System. It’s ranked one of the top 20 public universities in the country by U.S. News and World Report. More than 15 undergraduate programs and 40 graduate programs are ranked in the top 10 nationally. Home to 51,000 students, UT Austin is one of the biggest and best research universities in the United States. Its many programs include a BBA in Supply Chain Management.

Program Features

UT Austin’s Bachelor of Business Administration in Supply Chain Management requires 120 semester hours. Coursework blends core business courses with classes specific to the supply chain and operations management. Students learn how information technology integrates all elements of the supply chain, giving enterprises a competitive advantage. If you enroll in this program, expect to take courses including:

• Organizational Behavior
• Operations Management
• Procurement and Supplier Management
• Supply Chain Modeling and Optimization
• Logistics and Inventory Management

Notables

Students work closely with the faculty adviser in the Department of Information, Risk, and Operations Management. They are prepared for careers including buyer, materials manager, risk management analyst, logistics planner, and staff consultant.

Overview

North Carolina State University is a leading public research university in Raleigh, North Carolina. It’s ranked by both Princeton Review and U.S. News and World Report as one of the top five Best Value universities in the country. NC State also boasts some of the nation’s best undergraduate teaching and a variety of top-ranked programs. The university’s mission is to solve problems and provide leadership that transforms lives. It offers a BS in Supply Chain Management.

Program Features

NC State’s Bachelor of Science in Business Administration with a Supply Chain Management focus prepares students to become tomorrow’s supply chain leaders. Students learn how to develop and evaluate business processes, perform strategic and tactical supply chain planning, and manage the activities and resources that transform inputs into finished goods and services. Courses include:

• Business Policy and Strategy
• Business Process Management
• Operations Planning and Control Systems
• Supply Chain Strategy
• Logistics Management

Notables

Students are required to complete a practicum, a semester-long experiential learning project. The project pairs student teams with an industry partner to solve a specific supply chain problem the company is experiencing. Students gain both valuable work experience and professional contacts.

Overview

Kennesaw State is a public university with primary campuses in Kennesaw, Georgia and Marietta, Georgia. The university offers more than 150 degrees to over 35,000 students. KSU is a member of the university system of Georgia and is the third largest university in the state. Its business, engineering, and information technology programs are nationally ranked. Kennesaw State offers a BAS in Supply Chain Logistics.

Program Features

The Bachelor of Applied Science in Supply Chain Logistics is designed for students who have already completed an Associate of Applied Science or Associate of Applied Technology Degree. It prepares students in the areas of manufacturing, operations, logistics, and supply chain through an industry-driven curriculum. This curriculum encompasses manufacturing processes, quality principles, engineering economy, work measurement, and facilities layout. Students enroll in courses such as:

• Advanced Logistics
• Statistical Quality Control
• Quality Concepts and Systems Design
• Warehousing Systems
• Sustainability Engineering

Notables

The requirements for this degree may be completed online. Online participants can attend class “virtually”, meaning the student can attend class at a designated time/day via the Internet. Optionally, students can choose not to attend virtually and catch up through video lectures, recorded archives, and/or discussion groups The program is designed to be completed within two years.

Overview

The only public four-year university in Dallas, the University of North Texas at Dallas is growing rapidly. The university’s first residence hall is now in place, and a $63 million student center is under construction. Established in 2010, UNT Dallas currently serves over 3,500 students. The university offers over 40 academic programs, including a BS in Logistics and Supply Chain Management.

Program Features

The Bachelor of Science in Logistics and Supply Chain Management provides a well-rounded education using a “learn today, apply tomorrow” classroom philosophy. Students are required to participate in a 240-hour paid internship. Major coursework includes 21 credit hours of business foundation courses, 27 credit hours of logistic courses, and 6 credit hours of logistics electives. These courses include:

• Global Logistics and Supply Chain Management
• Logistics and Business Analysis
• E-Logistics in Supply Chain Management
• Logistics Application of Enterprise Resource Planning Systems
• Logistics Systems Modeling/Simulation

Notables

The curriculum was developed with input from an advisory board of 20 senior logistics executives, the North Texas Commission’s Logistics Development and Marketing Committee, and the Dallas/Fort Worth Roundtable of the Council of Supply Chain Management Professionals. This ensures that students stay up-to-date on current industry trends. Gartner Research recently ranked the program sixth among all logistics and supply chain management programs in the nation.

Overview

Northern Arizona University is a public university with its main campus in Flagstaff, Arizona. The university has additional campuses throughout the state, as well as NAU Online. For nearly 120 years, NAU has delivered a student-centered experience. Rigorous courses are taught by world-renowned professors and researchers. The school offers over 120 undergraduate, graduate, and certificate programs. This includes a Bachelor of Business Administration with an emphasis on Logistics and Supply Chain Management.

Program Features

NAU’s Bachelor of Business Administration has an available emphasis in Logistics and Supply Chain Management. The 120-credit program prepares students to make an immediate impact in leadership positions related to logistics and the supply chain. An internship is recommended, but not required. Coursework includes:

• Fundamentals of Logistics
• Strategic Logistics and Supply Chain Management
• Global Finance and Financial Analysis
• Entrepreneurial and Small Business Finance
• Advanced Logistics and Supply Chain Management

Notables

Students who are unable to complete an internship due to work/life circumstances may do an intensive guided study project on a specific industry and region under the guidance of a faculty member. A proposal for the project must be approved in advance by a B.B.A. full-time faculty member. This program is available on six NAU campuses and online.

Overview

Based in Potsdam, New York, Clarkson University is a private research university with five New York campuses in total. Founded in 1896, Clarkson has grown into a leader in research and technological education. Clarkson has more than 380 industry and government partners, giving students direct access to internships and careers after graduation. The university offers over 60 undergraduate and graduate programs. This includes a major in Global Supply Chain Management.

Program Features

Clarkson’s Global Supply Chain Management program is ranked one of the nation’s top 20 Supply Chain Management programs by U.S. News and World Report. Students take 42 credits of foundation coursework in business and 27 credits of specialized business courses. They also participate in a project-based professional experience such as a co-op, internship, directed research, or community project. You’ll take courses such as:

• Industrial Supply Chain Economics
• Information Systems for Supply Chain Management
• Logistics Management
• Negotiations and Relationship Management
• Global Sourcing and Supply Chain Design

Notables

During the first and second year, students will complete core business courses that provide a foundation in accounting, economics, marketing, and business innovation. In the past, students have interned with Lockheed Martin, Amazon, General Electric, IBM, Johnson & Johnson, Procter & Gamble, and other major corporations.

Overview

With a total of eight campuses, Miami Dade College is the largest institution of higher learning in the country. The college began operations in 1960 with 1,400 students. Today, over 165,000 students are enrolled in the school. Miami Dade is committed to changing lives through accessible, high-quality teaching and learning experiences. MDC offers more than 300 educational pathways, including a BAS in Supply Chain Management.

Program Features

MDC’s Bachelor of Applied Science in Supply Chain Management is a 120-credit program that takes four years to complete. It explores the risks, logistics, economics, regulatory issues, resource allocation, production planning, inventory management, and other functions basic to supply chains and business. Students gain a broad command of finance, operations, international law, and more. Courses include:

• Supply Chain Marketing
• Purchasing and Inventory Management
• Warehouse Management
• Safety and Risk Management
• Global Supply Chain Management

Notables

This program focuses on the applied knowledge necessary to immediately enter into successful employment. Graduates are employed as quality control systems managers, supply chain managers, logistics engineers, logistics analysts, and more. Some graduates also opt to attend MBA programs.

Overview

East Carolina University is a public university in Greenville, North Carolina. Founded in 1907 as a teacher training school, ECU is now the third largest university in the state. The school prepares students to live, work, and compete in the 21st century global knowledge-based economy. ECU is home to 12 colleges and schools offering over 250 degrees and certificates. One option is a BS in Industrial Distribution and Logistics.

Program Features

ECU’s Bachelor of Science in Industrial Distribution and Logistics provides a unique combination of coursework, technology, and hands-on learning. Classes are taught by professional faculty with industry experience, interactive teaching styles, and a strong network of career opportunities for graduates. Core courses include:

• Introduction to Distribution & Logistics
• Supply Chain Logistics
• Distributor Sales and Branch Management
• Security and Risk Analysis for Distributors
• Procurement and Inventory Control

Notables

ECU faculty networks with industry partners to help graduates leave with a career in addition to a degree. They guide and assist students through the recruiting process for careers in manufacturing, wholesale distribution, fulfillment center operations, transportation, and business to business sales. Students also complete an internship experience in distribution and logistics.

Overview

Located in Murray, Kentucky, Murray State is a public university. It has been recognized by U.S. News and World Report as one of the nation’s top regional universities for 28 years in a row. The school enrolls over 10,000 students. It aims to engage students in collaborative scholarship, creative activity, and research. Murray State offers 126 academic programs across six colleges and schools. This includes a Logistics and Supply Chain Management program.

Program Features

Murray State’s Logistics and Supply Chain Management program requires 120 credits. It prepares students to manage and coordinate the efficient flow of materials, products and information within and among organizations. Business core requirements give students a solid background in economics, finances, business communication, and marketing. Courses focused on the supply chain include:

• Process Management
• Logistics Management
• Purchasing and Supply Management
• International Transportation and Logistics
• Supply Chain Management Strategy

Notables

Graduates are employed as supply chain managers, purchasing managers, transportation managers, operations managers, logistics analysts, logistics managers, and more. Students are not required to complete an internship, but hands-on learning is delivered through real-world projects.

Overview

The University of Rhode Island is the flagship public research university of Rhode Island. The main campus is located in Kingstown, but URI has three additional campuses. 18,000 students attend the university, and faculty has grown by 40 percent in the last several years. The university offers 170 degree and certificate programs. One of these programs is a BS in Supply Chain Management.

Program Features

URI offers a Bachelor of Science in Business Administration with a focus on Supply Chain Management. The major focuses on the strategic planning, design, operations, transportation, logistics, and improvement of all activities involved in the procurement, manufacture, and delivery of goods and services. Students learn the interdisciplinary skills necessary for linking major business processes. Students in this program take courses like:

• Operations and Supply Chain Management
• Supplier Relationship Management
• Management Systems Analysis
• Global Warehousing and Distribution Systems
• Supply Chain Network Modeling and Optimization

Notables

This program is recognized as one of the top 25 Supply Chain Management programs in the country. Students take core business classes in economics, accounting, managerial decisions, and business communications before narrowing the focus to supply chain management. During junior year, students take a one-credit Junior Career Passport Program to prepare for a successful transition to the working world.

Overview

Rider University is a private university in Lawrence Township, New Jersey. Founded in 1865, Rider is committed to student growth, transformation, and leadership. Graduates are prepared to thrive professionally and make meaningful contributions to the changing world in which they live and work. U.S. News and World Report ranks RU in the top tier of northern regional universities. RU offers 126 academic programs, including a BS in Global Supply Chain Management.

Program Features

RU offers a Bachelor of Science in Business Administration with a major in Global Supply Chain Management. This is an interdisciplinary program combining theory and practice with hands-on internship and mentoring experiences. Students learn the many dimensions of supply chain networks that businesses use to acquire, produce, and deliver goods and services across the global marketplace. Courses include:

• Supply Chain External Focus: Customer and Supplier Logistics
• Supply Chain Internal Focus: Firm Operations
• Supply Chain Strategy and Design
• Customer Focus
• Business to Business Marketing

Notables

Rider’s Global Supply Chain Management curriculum is ranked in the top 20 by global research firm Gartner, Inc. All students complete one or more internships or co-ops at companies including L’Oreal, Pfizer, Johnson & Johnson, and Estee Lauder. Over 95 percent of program graduates have landed jobs in supply chain management within just three months after graduating. Many receive and accept offers well before graduating.

Overview

Founded in 1927, the University of Houston is the third-largest university in Texas with an enrollment of over 45,000 students. The university empowers students in their pursuit of learning, discovery, leadership and engagement. It’s ranked as a Tier One university by U.S. News and World Report. UH offers over 250 degrees, including a BS in Supply Chain and Logistics Technology.

Program Features

UH’s Bachelor of Science in Supply Chain and Logistics Technology gives students the option to choose one of four tracks. These tracks are Operations, Systems Management, Global Logistics, and Directed Emphasis (designed for community college transfers). The program is STEM-designated by the Texas Higher Education Coordinating Board. In this program, expect to take courses like:

• Financial Evaluation Supply Chain Management
• Distribution Channels
• Global Supply Chain
• Procurement
• Inventory and Materials Handling

Notables

Students are required to complete a practicum in Supply Chain and Logistics Technology. They also take courses in economics, business communications, computer applications, business law, and logistics technology.

Overview

The University of Texas at Dallas is a public research university in the University of Texas System. UT Dallas has cutting-edge programs and strong ties with business and industry. The university is ranked as one of the top 100 tuition values in the nation by Kiplinger’s Personal Finance. It offers over 142 degree programs, including a BS in Supply Chain Management.

Program Features

The Bachelor of Science in Supply Chain Management at UT Dallas helps students build a versatile skill set that is critical to business success. The 120-credit program includes preparatory courses in business, economics, human resources, and mathematics. Coursework then narrows to focus on supply chain management with classes such as:

• Supply Chain Management
• Project Management
• Lean and Sigma Six Processes
• Logistics and Inventory Management
• Purchasing and Sourcing Management

Notables

A practicum experience in Management or Supply Chain Management is required, along with a community engagement experience. The student has the option for zero or three semester credit hours, depending on the experience and preference for additional electives.

Overview

A public university in Moorhead, Minnesota, Minnesota State University has an enrollment of approximately 6,600 students. The school’s purpose is to transform the world by transforming lives. Core values include grit, humility, and heart. The university also focuses on student achievement and students’ return on their investment. MSU Moorhead has 247 academic programs, including a BS in Global Supply Chain Management.

Program Features

MSU Moorhead’s Bachelor of Science in Global Supply Chain Management prepares students to successfully implement supply chain strategies both domestically and internationally. Globally minded students learn to identify the components of global supply chains, explain how organizations operate and adapt, and explain the connections between related disciplines. Students also learn about current and future career opportunities in the field. Courses include:

• Supply Chain Management
• Operations Management
• Purchasing and Sourcing Management
• Production Inventory Management
• Logistics Management and Network Design

Notables

Students must complete either an internship or Dragon Consulting. In Dragon Consulting, students work on project teams to apply their academic knowledge to real life business problems in real time. Students provide consulting services for businesses through the Center for Innovative Business Solutions.

Many companies are facing maturing home markets while seeing an apparently limitless growth potential in merging markets. They are driven by improved communications technology and advances that are changing the economics of transportation and manufacturing scale. Additionally, shifting public policy and regulatory attitudes are creating more open markets throughout the world. The result: globalization spreads from industry to industry.

Accordingly, many purchasing organizations are being challenged to increase the level of 'global sourcing' to tap into promising opportunities and to fend off competition. Unfortunately, many companies are ill equipped for the challenge: though global sourcing employs the same set of activities as domestic sourcing, there is also greater complexity (see Exhibit I). Based on our experience, most companies need to enhance the skills of their purchasing organizations to pursue global sourcing effectively.

Although our research in this area is still under way, this article explores some issues in global sourcing encountered by our clients. The article is part of a series in Strategy & Business expounding upon the skills required in the business model that Booz-Allen describes as 'balanced purchasing.'

Strategic Considerations

Global sourcing generally refers to sourcing outside of a company's traditional market. Two quite different strategic drivers may be behind a company's desire to source globally:

Global expansion into new markets often forces a company to establish a local supply base.

Suppliers outside the home market may offer superior technology or low labor cost in products.

A recent study by Booz-Allen & Hamilton highlights that most of the sourcing in the former Eastern bloc has been driven by a desire for cost reduction. The need to develop a local supply base in order to penetrate the Eastern European market was a distant second (see Exhibit II). This finding is consistent with our experience in other regions as well: only a small set of truly global companies are focused on building a global supply base, while the vast majority of companies are turning to global sources because their domestic suppliers are no longer providing 'world class' cost and/or technology.

The two different strategic objectives influence a company's approach to global sourcing in a variety of ways. Companies focused on global expansion are more likely to have a local presence in the foreign country, and this improves their ability to execute global sourcing. For example, these companies usually employ buyers who are native to the particular country, eliminating a potential language barrier with suppliers. They also are able to take a longer view towards supplier development. However, globally expanding companies usually have more complicated strategic objectives: government relations, balance of trade and export targets must be considered in addition to insuring the lowest total delivered cost at the factory door.

But the most important effect of the different objectives is in commodity segmentation to identify the best targets for 'global sourcing.' A company that sources globally to import back to its home market tends to focus on small, high-value components that can be shipped economically. This global importer looks to developing countries for components with labor cost advantages in simple process technologies. In mature countries, this company usually seeks access to 'world class' technology expertise.

Nike, which sources the full product rather than the components, provides an interesting example of capturing low labor cost and technological capabilities. In the past two decades, Nike has developed an extensive supply base of approximately 40 locations -- predominantly in low-wage-rate countries throughout Asia. As a result, Nike achieves a landed cost for the Pegasus running shoe in the United States of about 25 percent of the retail price. Interestingly, Nike has created an effective mix of low-cost countries with higher-cost ones. Initially, much of Nike's production was in South Korea and Taiwan, when they were considered low-cost countries. However, as wage rates increased, Nike developed new suppliers in lower-cost countries like Indonesia and China. At the same time, Nike continued to increase the technological complexity of the product with such features as air cushion inserts and multicolored soles. Accordingly, the more sophisticated suppliers in South Korea and Taiwan produce increasingly complicated products while new suppliers in countries with lower wage rates produce the simpler, high- labor products.

Conversely, a globally expanding company seeks local suppliers for the bulkiest products -- the ones that cannot be economically imported into the region. When expanding into a growth market, a company tends to select components with high labor content such as large sub-assemblies, capturing the labor cost advantages and reducing transportation cost. In expanding into mature markets, a company generally focuses on major systems that require technological sophistication but not low labor cost.

Globally expanding companies must also strive to optimize product development costs. Many companies are now trying to capture scale advantages by amortizing product development costs over global volume, based on the converging expectations of customers around the globe. Nevertheless, global sourcing decisions must balance the scale advantages of using standard designs around the globe against the potential cost advantages of 'de-contenting' designs to meet cost targets and local expectations.

For example, a leading automotive company has employed a new segmentation scheme to drive sourcing decisions in support of its global expansion. Exhibit III shows the segmentation of the commodities from both a manufacturing perspective and a product development perspective.

The above chart focuses on the two issues of manufacturing scale and transportation cost. Commodities plotted in the top left-hand corner of the matrix are excellent candidates for global sourcing from a single world-class supplier to serve a company's total needs. The commodities in the bottom right-hand corner are the best candidates for local sourcing in support of global expansion.

The right chart of Exhibit III adds the issue of whether a single global design should be employed instead of local specifications. The company has identified four tactics to optimize the trade-off between design standardization and local 'value engineering':

Where product development costs are high and the value of customized local designs is low, 'carry-over' designs from the mature market are used in the emerging markets.

At the opposite extreme, in the cases where the cost saving potential of customized designs is huge, the company creates new designs that meet local customer needs.

Where the benefit of new design is relatively low but the product development costs are also low, the company uses the original design with relaxed specifications to match the capabilities of the local supply base.

The most critical area occurs where local design offers significant opportunity but the product development costs are high. In such cases the company has the original supplier develop a range of products using modular design principles that allow local customization with lower overall development costs.

Bringing the two segmentation schemes together provides the strategic direction. In the example provided, the client concluded that large stampings should be manufactured in the same locale as their assembly plant since there is only moderate manufacturing scale and extremely high transportation cost. Furthermore, since the new tooling would be required anyway, the incremental product development cost to 'localize' the design is relatively low. On the other hand, electronic controls should be produced to a standard global design and shipped globally, since transportation cost is relatively low and product development cost is quite high.

From Booz-Allen's experience the strategic considerations highlighted here are often given inadequate attention by many companies.

Tactical Considerations

Global sourcing also adds complexity to tactical activities. One common obstacle is the unavailability and inaccessibility of information on the supply base. First, few countries have the sophisticated information infrastructure that American buyers are dependent upon. For instance, Thomas Register, the ultimate supplier reference for many buyers, does not cover Slovakia or Belarus. Fortunately, most countries have organizations that play 'Chamber of Commerce' roles. Though many of these organizations have materials available in English, the likelihood of getting good information in a country improves dramatically with the ability to speak the language.

The combination of limited information with the challenge of multiple languages led one company to enlist Booz-Allen to support an expansion of sourcing into Eastern Europe. First, the team segmented the commodities to focus the research on areas that should have the greatest potential. Next, by combing the available information sources in six countries, the team identified several thousand potential suppliers of the selected commodities.

As shown in Exhibit IV, this group was culled to about 500 suppliers that appeared to warrant further investigation through a written survey. The survey requested information on a variety of topics such as quality certifications, customers in Western Europe, capacity availability and process technology.

A little less than half of this group responded to the survey. Using the survey responses, potential suppliers were sorted into three categories: green, for those with high potential; yellow, for those seen as possible suppliers; and red, for those whose candidacies were closed out. Site visits were arranged with green and yellow suppliers. The visiting team conducted basic quality audits and interviewed management teams to assess the people and processes. The site visits indicated that about 13 percent of the survey-based green and yellow suppliers were not capable. Still, nearly 90 percent of the suppliers visited were classified as green or yellow at this stage (see Exhibit V).

The results highlighted a major opportunity for re-sourcing, and the client has contracted with Booz-Allen to support the effort into implementation.

One tactical complexity of global sourcing comes from the need to make 'apples to apples' comparisons in examining total delivered cost. These costs fall into three major categories:

currency risks

tariffs

logistics and intermediary costs

Properly assessing currency risk is an art that can make a trader wealthy but that generally leaves a buyer in a state of confusion or fear. The best tactic is not to try to 'outguess' the traders, but simply to lock in currency exposure with forward contracts and hedging. Too many companies that should have been focused on their core businesses have lost money by speculating on currency.

Tariffs present an additional item of complexity. As shown in Exhibit VI, the rates vary significantly by country. An even greater complexity, however, comes from variation by commodity or product classification within a country. Generally, nations impose higher tariffs on high-level assemblies or critical industries to encourage (or protect) local production. As a result, minor differences in a product's classification can have an order-of-magnitude effect on the tariff rate.

Logistics costs are usually higher when importing materials from a foreign source since the distances are generally greater. Appropriate comparisons should consider the optimal mode ( rail, truck, air or ocean freight) by considering inventory and expediting costs as well as actual transport. Global sourcing often creates additional intermediaries, such as foreign distributors, brokers, freight forwarders and customs clearing agents. Their fees are generally small individually but can be significant in total.

The tactical issues in global sourcing generally disappear with experience, but the learning curve can be expensive. Implementation issues are actually more challenging since they are often addressed through strategic decisions.

Implementation Issues

The two major implementation issues are culture and/or language and supply chain complexity. Though these issues are experienced in day-to-day execution, the best solution is often to make direct investment in people and facilities in the targeted global markets. A company that hires native resources in the region can counteract the cultural and language issues and can also simplify control of the supply chain.

Although English is generally the common language of business throughout the world, language skills vary. Many global executives can describe the sense of frustration that occurs when other participants break off into a 'private' conversation in their native language during a meeting.

Even where language barriers are few, significant cultural barriers may still exist. Most business executives traveling to Japan quickly learn basic 'customs' like exchanging business cards and small gifts. However, many still fall into the subtle trap in meetings of engaging with the most fluent English speaker rather than the most senior member of the Japanese team. Even the most experienced buyers struggle in negotiations in the consensus-driven cultures of Asia, where harmony is generally more important than frankness.

Complexity of the supply chain is another implementation challenge in global sourcing. As discussed earlier, a wide variety of intermediaries such as foreign distributors, brokers, freight forwarders and customs clearing agents may separate the customer from the supplier. These intermediaries add not only cost but also uncertainty to the supply chain. The multiplicative effect of these uncertainties can make a global supply chain difficult to manage. Simply tracking a shipment through each stage of the chain can be a time-consuming process.

Many companies have found that international purchasing offices are the most effective means for eliminating or controlling the many intermediaries. The international purchasing office plays two key roles. First, it provides a physical presence to manage the flow of the materials. Second, it provides the skills needed for successful global sourcing -- eliminating the need to build the skills in every buyer in the home market. However, investment in the infrastructure of an international purchasing office is significant and can be cost effective only if a significant number of purchases is managed by the region or if the company already has a significant presence in the region.

For the interested reader, practical advice on executional challenges of global sourcing can be found in the book 'Global Supply Management' by Dick Locke. For example, in the first chapter Mr. Locke calls upon his experience in setting up and running Hewlett-Packard's first international purchasing office in Asia to identify the most common mistakes that buyers make in global sourcing (see Exhibit VII.)

Conclusion

There are many hurdles to overcome in global sourcing. All of the hurdles add cost or increase risk or both. As a result, many companies attempting global sourcing find the benefits are less than expected. Furthermore, ineffective global sourcing can have a detrimental effect on global expansion. An inability to build a local supply base can lead to failure of the entire business in a new market.

However, from our experience, companies that are willing to invest in building the skills to support global sourcing can be successful. It is not easy, but it can be done. More important, in industry after industry, it must be done.

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