When sourcing globally, the most important challenge is balancing the difference between piece price and total cost. The piece price is the direct cost of purchasing the material, while the total cost includes all associated costs such as transportation, tariffs, warehousing, lead times, and risk of supply chain disruptions. Focusing solely on the piece price can lead to underestimating the actual cost implications of global sourcing, thus impacting the overall profitability and efficiency of the supply chain.
Identification of sources capable of producing the materials is important but not the primary challenge.
Availability of low-cost labor and energy is a factor but does not address the comprehensive cost considerations.
Complying with specific import/export issues is a regulatory challenge but is part of the total cost consideration.
References:
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). "Purchasing and Supply Chain Management."
Christopher, M. (2011). "Logistics & Supply Chain Management."
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