SCM Trigger 1 - Sourcing

Learning Objective 1 - What SCM factors to consider when planning sourcing?

Today’s business environment demands a continuous search  for new sources of competitive advantage. Lasting success requires steady and sometimes dramatic cost reductions, quality and delivery improvements, reduced cycle times, and improved responsiveness to customer, competitive, and financial market demands.
Global sourcing involves proactively integrating and coordinating common  items and materials, processes, designs, technologies, and suppliers across worldwide purchasing, engineering, and operating locations. Those firms that succeed will be the ones that have learned how to leverage and coordinate their activities on a worldwide basis.

Learning Objective 2 - What are the economic aspects affecting sourcing?
Learning Objective 3 - What is the impact of technology in sourcing?

According to Sara Ireton, a set of key factors to consider when making global sourcing decisions should include:
1. Total landed cost.
2. Product quality.
3. Logistics capability.
4. Location.
5. Trade regulations.
6. Finances.
7. Time to market/responsiveness of supplier.
8. Value-added services.
9. Communication/IT capabilities.
10. Human toll.

Learning Objective 4 - Wärtsilä's approach to global sourcing (acc. to its Supplier Handbook and website)

The handbook provides a set of very useful procedures and checklists in regards to the processes related to global sourcing in Wärtsilä and expectations towards the suppliers. Starting from a general framework for operations, and commitment to sustainability, the handbook lists the supplier requirements:
- Compliance (compliance with relevant legislation, restrictions on substances and materials, prohibition of illicit payments, regulations on export control)
- Occupational health and safety
- Social issues (i.e. respect for human rights, freedom from discrimination, etc)
- Innovation and protection of proprietary information
- Quality
- Environment
- Security
- Submitting the necessary information
The handbook also covers criteria for supplier assessment and selection and the requirement for the supplier to provide a Quality Assurance Plan. The supplier should provide documents for unique identification of Product batches or lots for material traceability.
Supplier performance evaluation is also regarded by Wärtsilä as one important KPI.

Sources:

1. Wärtsilä’s “Supplier Handbook” http://www.wartsila.com/docs/default-source/About-us/supplier-handbook.pdf?sfvrsn=0
2. Article: Trent, Robert J; Monczka, Robert M, “International Purchasing and Global Sourcing, what are the differences?” Journal of Supply Chain Management; Fall 2003, 39 p26.
3. Sara Ireton, 10 Factors to Consider When Sourcing Globally - http://www.joc.com/content/10-factors-consider-when-sourcing-globally