Write notes on the following?

a) Factors affecting the global sourcing decisions.

b) Issues relating to the security and pilferages

a.)

Factors affecting the global sourcing is one of the critical steps in buying goods and services, where individuals or groups analyze, assess and select a vendor and their goods and services based on certain specifications and requirements:

1. Total landed cost.

It is easy to focus on the lowest unit cost and assume that’s the best way to go. But unit cost is just one piece of the total cost equation. Other factors include transportation, customs and duties, brokerage services (both at origin and destination), banking fees, financing and insurance, to name a few. Further, there could be additional, unexpected costs. If customs decides to examine the freight,  should add in charges for the examination and local coordination charges. What if fumigation is required More charges. Any delays in the supply chain could result in expedited freight charges in order to meet the target delivery date. While these may not occur, it is best to plan for the worst, and hope for the best.

2. Product quality.

The quality of the product has ramifications over and above the unit cost on the balance sheet. Quality needs to be defined so that the supplier and buyer understand and are in agreement. If there are issues with the quality of the product, it is much harder to address with a vendor through cultures, time zones and geographies, than if you are meeting with a local supplier. Poor quality affects everything downstream, most obviously the rate of returns by dissatisfied customers. Returns drain the business, taking up resources that are more typically focused on getting good product out to the market, not receiving bad product back in. Defective product may need to be sold at a discount or written off as a loss, each of which affects the bottom line. A key part of an efficient supply chain is having quality product all the way through it. In some cases, it may involve trial and error, but as relationships grow over the years, some suppliers stand out as offering a consistently superior product. These are the relationships to nurture.

3. Logistics capability.

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