Operations and Supply Chain Management The Core

are manufactured in Japan, horizontal
stabilizers in Italy and South Korea,
passenger doors in France, and cargo
and access doors in Sweden. In order
to move all these parts, Boeing modified
four used 747-400s into 747
Dreamlifters, gigantic planes capable
of carrying completed wings and
large fuselage sections.
This radically different approach
to building planes is designed to
save cost and speed production.
BOEING WORKERS GATHER AROUND A 747 DREAMLIFTER AT THE COMPANY’S
ASSEMBLY PLANT IN NORTH CHARLESTON, SOUTH CAROLINA.
©Stephen Morton/Bloomberg via Getty Images
STRATEGIC SOURCING
Strategic sourcing is the development and management of supplier relationships to acquire
goods and services in a way that aids in achieving the immediate needs of the business.
In the past, the term sourcing was just another term for purchasing, a corporate function
that financially was important but strategically was not the center of attention. Today, as a
result of globalization and inexpensive communications technology, the basis for competition
is changing. A firm is no longer constrained by the capabilities it owns; what matters
is its ability to make the most of available capabilities, whether they are owned by the
firm or not. Outsourcing is so sophisticated that even core functions such as engineering,
research and development, manufacturing, information technology, and marketing can be
moved outside the firm.
Sourcing activities can vary greatly and depend on the item being purchased.
Exhibit 13.1 maps different processes for sourcing or purchasing an item. The term
sourcing implies a more complex process suitable for products that are strategically
important. Purchasing processes that span from a simple “spot” or one-time purchase to
a long-term strategic alliance are depicted on the diagram. The diagram positions a purchasing
process according to the specificity of the item, contract duration, and intensity of
transaction costs.
LO13–1 Explain
what strategic
sourcing is.
Strategic sourcing
The development
and management of
supplier relationships
to acquire goods and
services in a way that
aids in achieving the
needs of a business.
Sourcing
A process suitable
for procuring
products that
are strategically
important to the firm.