Several years ago a Fortune 100 manufacturing firm decided to conduct a comprehensive analysis of its total spend. It found that over 90 percent of its expenditures were with North American suppliers. Further, the analysis revealed that competitors were relying on Asian suppliers for a significant percentage of their purchases, creating cost disadvantages for the manufacturing firm. These findings prompted dramatic changes in how the firm approached sourcing. As part of a coordinated effort to take a more global view of sourcing, the firm restructured its organization, created cross-functional strategy development teams, and more fully engaged top-level executives in the sourcing process. Several years later, this company is no longer at a cost disadvantage to its competitors, having recorded improvements of 15 to 30 percent across most of its major purchase categories.

The pressures on companies like this manufacturing firm to improve are relentless and severe. Increasingly, the leading companies are realizing that development of well-crafted global sourcing strategies is an effective way to respond to these pressures. And since most organizations have yet to adopt such a comprehensive approach to global sourcing, improvement opportunities abound—and the potential competitive advantages are great.