In: Operations Management
what are the 10 reasons for global purchasing
explain in details the ten reasons and define global purchasing
Global Purchasing is the practice of buying from the global market for goods and services across geopolitical boundaries.Global purchasing can be defines as the activity of searching and obtaining goods, services and other resources on a possible worldwide scale, to comply with the needs of the company and with a view to continuing and enhancing the current competitive position of the company. It includes not only the operational task of buying but also the more strategic responsibilities such as supplier development, integrating and developing the supplier base and the generation of global purchasing synergies.It includes all the phases of the period from the preparing of list , selecting supplier, buying and evaluation.This process has emerged because of the competitive advantage it brings for the company.Ten reasons for Global purchasing are-
1.Insufficient domestic capacity- This is one of the reasons why firms/companies are looking out for global suppliers and not in the local market.. Many companies source overseas because domestic suppliers lack the capacity to produce some goods. Many businesses require raw materials and services which may not be present within the domestic market and has to bought from global markets.
2.Extend the firms's technological capability - This mostly happens in developing countries where technological develpment is low as compared to the developed countries and where highly developed machines might not be there and in order to increase the technological capability of the firm, they do global purchasing.
3.Changes in the business environment- This contribute a lot to the demand for international purchasing. When the firms move their business to a new environment, there is a high possibility that such environment will lack the necessary raw materials and services needed for the smooth operation of your business, reaching out to the international market will be handy for the firms.
4.High quality products-Products imported from global firms that specialise in the particular product will offer higher quality in their products.Due to the factor of high quality, gobal purchasing is needed.
5.Access to fresh research and specialised intellectual capital- New design of products, machines that are capital of the firms can be bought from other countries's firms globally.It gives the business access to new research, design of products and intellectual capital and is enough for a kickstart for new firms.
6.Lower prices-Products are bought globally by not only firms but also by individuals as the products are comparatively sometimes cheaper than domestic products which tempts everyone to buy globally.
7.Better delivery performance- Firms tend to take care of international deliveries more than what they do for domestic ones which urge the need for global purchasing by the buyer firms and individuals.
8.Customer demands- With the invasion of social media, customer demand in the market rises for products that are in trend in foreign countries which calls out for the need for firms to buy such products from the international market to meet customer demands.
9.Improved performance-If firms buy goods from global market to meet customer demands , it would increase their overall performance and also earn customer satisfaction.
10.Remain competitive-Firms buy products from global market to remain competitive in the market and earn the first-move advantage in the local market.Also helps the firm improve financial performance.