Discuss the Terms: Strategy, Relationship Development, and Global Sourcing Challenges

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- Cultural Difference:

After a long time of development, every country has its own culture including values, beliefs and behaviors. But it is essential to have knowledge of such differences when doing the global sourcing especially negotiating. An organization must know the practice of their suppliers. For example, when doing a business with Chinese, it is better to leave room for price because Chinese like bargaining.

- Policy Factor：

In normal conditions, there are two kinds of policy factors which can effect global sourcing. The first one is duty, when buying good from one country to another country, importing country will charge import duty, thus increasing the cost of the goods. The other important policy factor is quantitative trade quota. Policy may not allow you to purchase what you need from other countries.

- Currency Fluctuations:

According to the fact that different countries cannot use the same currency, there must be money exchange in the process of global sourcing. The fluctuations of exchange rates between the buyer’s currency and that of the supplier’s currency may lead to pay more or less than expected. This fact, in a way, results in some kind of unsteadiness in global sourcing.

- Language Barrier:

A good communication is the first step to make a deal. In global sourcing, language barrier is very common. Even in recent times English has been very popular, but it still not the native language for most countries. Some misunderstandings often happen. That is also a challenge for global sourcing.

- Design Difference:

There are some differences in the design of the products between different countries. This, to some extent, adds the difficulties to the global sourcing. For example, America use American-standard electrical plug, Hong Kong use British-standard electrical plug. If without the reservation, it is hard for Hong Kong company import electrical plugs from the America. This is maybe a challenge for global sourcing.

- Quality Standards: [pic 19]

Different countries may have different quality standards. And the test standards are different. This situation may happen: the products are up to the quality standard in exporting country but fail to come up to the quality standard in importing country.

- High Cost

Last but not the least the cost. Cost always means everything for an organization. When doing the purchasing, the first thing to be considered is the cost. I believe that global souring is also for this reason. But if there are any problems in any aspects we have talked about above, there must accompany the raising of the cost.

So cost must be a big consideration.

Question 2:

Discuss the benefits and challenges of managing effective supply management in a global organization.

Dell's Direct Business Model and Supply Chain Management

Over the past 20 years, Dell revolutionary changed the whole industry. All of these are not only attributed to its unique direct business model, but also to the support of its efficient supply chain management platform which based on modernization. In the following parts, I will briefly introduce the Dell’s direct sales model, Dell’s effective supply management, the benefits and the challenges of managing this supply management.

2.1 Dell’s direct business model

Direct business model embody in Dell is based on the end users’ demand patterns. Dell establishes a set of channels to contact with the customer. The customers directly send their orders to Dell. Those orders can show detailed lists of the necessary configuration. Then the company can produce what they need according to the detailed lists. The essence of Dell’s direct business model is "on-demand custom". After finding the clear demand of customers, Dell can respond quickly and directly delivery goods to their customers.

This business model focuses on shorten the execution time of the order and reduce inventory. The former keeps Dell with the fastest speed to provide customers with what they need, which significantly improve the customer satisfaction and loyalty. The latter effectively reduce the cost of the company, which significantly improved the level of profitability and competitiveness.

2.2 Dell’s effective supply management[pic 20]

- The "zero inventory high turnover" of Dell's supply chain

Through the simplification and optimization of supply chain process, the improvement of information feedback speed, the strength of the inventory management ability and the collaborative relationship with the supplier, Dell has a highly effective supply chain management platform which can achieve the target of "information instead of inventory".

- The transportation of Dell's supply chain

Dell uses air transport shipping parts from Asia and using parcel transport shipping PC to the client. The using of the expensive air transport is based on the mutual comparison of transportation cost and profit. Parcel transport can provide Dell with fast and reliable delivery and can accelerate the circulation of Dell's inventory. Moreover order tracking is conducive to directly inform customer of the cargo status.

- The facilities strategy Dell’s supply chain management

Dell has five production bases worldwide and extensive uses e-commerce to complete all processes of the supply chain. The former reduces the fixed investment of facilities, expands the proportion of the cash flow. The latter reduces the cost of management which makes it is not necessary for Dell to set up entity distribution and retail agencies, but directly uses customer in sending orders.

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