CHAPTER 7

Sourcing in China

Sourcing is a procurement strategy practiced by businesses looking to cut costs by purchasing production inputs from another company that produces it more cost-effectively. Global sourcing refers to the procurement of inputs from suppliers in other countries, usually for components, but also for finished goods. Outsourcing is hiring another company to operate a significant part of the business, which is possible both in manufacturing and services.

Strategic sourcing1 became the standard procurement process for large firms in the 1980s and 1990s, consisting of these steps: 1) assess what the firm buys, 2) assess the total supplier market, 3) determine costs to make or buy the component, 4) identify favored suppliers, ...

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