Question

Sourcing selection strategy has a very important role in the supply chain and one of the most important point is Trade Regulations. Please write at least 3-5 paragraphs about Sourcing selection strategy and the Trade Regulations, and how important is that for a business, and how it effect the business. Also, list some examples about some businesses.

Answer 1

While lack of an effective sourcing strategy will lead to a business not meeting its objectives and targets, having an effective source strategy will help it in cost reductions and getting competitive advantages. Developing long term relationships with suplliers who will provide quality products at low costs is very important.

High volume purchases can be used effectively to lower the costs through supplier negotiations. This will give a competitive advantage to the business. Improving relationships with suppliers and involving them in supply chain decisions will help in procuring the materials in a timely manner. In addition, having good relationships with the suppliers will help in identifying potential risks and dealing with them in advance.

It is also important to see that the suppliers follow all the rules and regulations of the land. Sourcing from suppliers who do not follow rules and regulations will be detrimental to the business. For example, Nike faced many legal issues when they sourced from suppliers in Pakistan and Bangladesh, who practised child labor.

Selecting suppliers who do sustainability reporting, who are ethical and who conduct environment friendly operations is more desirable. Selecting such suppliers will eliminate the risks of selecting supplier who may go out of business or who may face legal issues leading to not receiving the materials on time. For example, after facing legal issues in third world countries, Nike started analyzing its suppliers on a variety of factors like whether they follow regulations, whether they can provide the goods on time etc and this lead to production continuity and cost reductions.