Global_Sourcing__Myth_or_Reality_

qwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwer tyuiopasdfghjklzxcvbnmqwerty Literature review uiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjkl zxcvbnmqwertyuiopasdfghjklzx cvbnmqwertyuiopasdfghjklzxcv bnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnm qwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmrtyui opasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdf SUCCESS IN GLOBAL SOURCING: MYTH OR REALITY' PROF. DR KAI Ines MALLET – EBS BUSINESS SCHOOL Table of contents 1) Introduction 1.1 Problem definition and objectives 1.2 Course of investigation p2 p3 2) Global sourcing as a required part of a successful manufacturing strategy 2.1 Thanks to the advantages it provides 2.2 Included in a manufacturing strategy 2.3 Case of Zara: a successful combined procurement strategy p4 p5 p5 3) Global sourcing success subject to risks and illusions 3.1 Risks associated with global sourcing p6 3.2 The myth of many firms blocked at intermediate levels of global sourcing 7 3.3 Case of China sourcing: a dream that could turn into a nightmare p9 4) Global sourcing success variables 4.1 Its organisation 4.2 Key elements to achieve excellence in global sourcing 4.2.1 Monczka and Trent model 4.2.2 Other literature insights p10 p11 p11 p13 5) Conclusion 6) References p14 p15 1 1) Introduction 1.1 Problem definition and objectives While talking about Chinese sourcing, Michael Matteo, senior vice president, sourcing and operations, at ThreeSixty Sourcing Inc., which provides global sourcing services in China, stated that: “The first myth is “Sourcing is easy”” and then, kept on by telling that sourcing decisions “require a thorough process of due diligence.” What was hidden behind these quotations' What was he implying by telling that' Those are part of the questions we intend to answer in this paper. Global sourcing emerged in the 1980s in reaction to the increase of the foreign competition in local markets. Then, since its apparition, it has grown relentlessly. As a result, nowadays, global sourcing is considered as a usual business practice. From a literary point of view, before the year 1986, only 29 articles around the general topic of “sourcing” were published and the notion of “global sourcing” was totally inexistent through the literature. Then, as a consequence to its fast development, it became more and more mentioned in literature, in particular following the article by Kotabe and Omura (1989). Nevertheless, according to a new study from CAPS research, a non profit supply chain research organization, the current global sourcing initiatives taken by most companies worldwide are not without possibility of improvement as for their effectiveness. Hence, the aim of this paper will be based on the explanation of both quotations from Matteo and from CAPS research. However, before detailing the main objectives of this paper, comprehensive and clear definitions of our subject paper is to be provided. Indeed, many authors have focused on this topic by adopting two different general dimensions (e.g., the strictly defined variant in opposition to the more loosely defined variants). The main difference between the both is that the strictly defined variant (Vos, 2004) focuses on the transactions between different companies and therefore, does not consider the transactions between the business units of a firm, on the opposite of the other type of global sourcing definition (Monczka and Trent 1991, Petersen 2006) which has an intra-sourcing dimension. Hence, on the one hand, global sourcing is considered according to Vos (2004) (e.g., the strictly defined variant) as a concept 2 “that takes place when a producer, who regards the whole world as a potential purchasing market, sources from (internal or external) foreign suppliers.” On the other hand, the more loosely defined variant refers to a comprehensive concept that focuses on the integration and coordination of common items, materials, processes, designs, technologies and suppliers across worldwide buying, design and operating locations (Monczka and Trent, 1991). This last definition of global sourcing will be considered as a benchmark during our research. Now that we clearly define our topic, we have to wonder about the main purpose of this literature paper. Its main goal should be, meanwhile, to provide an accurate overview of what has been seen in the literature around global sourcing successes and failures and to analyze those literary points of view to deal with the well-known issue of finding success in global sourcing. Then, to be more precise about our main aims writing this paper, we wrote a list of questions, it should answer: In which measure could we consider the global sourcing as a successful process' Could it be implemented successfully by every company' And if so, could they all expect to the same level of efforts and results in global sourcing' Is it indispensable for a firm that intends to be successful to adopt global sourcing practices' What are the key elements that make global sourcing initiative successful' Is the Chinese sourcing so easy than what is told or is there it only a myth' 1.2 Course of investigation In order to analyze the impact of global sourcing practices on the success of a company and to answer properly to all those relevant questions, an extensive review of the relevant literature was conducted. First of all, we will briefly introduce our topic and the main objectives of our research. Then, during our first hypothesis, we will stare at the global sourcing practices as a necessary part of a manufacturing strategy, which includes that global sourcing should not be considered as a whole strategy but only as a segment of the last one. In our second hypothesis, we will concentrate on the challenges and illusions most often associated with global sourcing. Last but not least, before concluding our paper, we will pay interest to the key factors to achieve excellence in global sourcing so as to make the dream of global sourcing become a reality. 3 2) Global sourcing as an indispensable part of a manufacturing strategy 2.1 Thanks to the various advantages it provides The primary advantage while implementing a global sourcing strategy is the wellknown cost efficiency provided (Murray, Kotabe and Wildt 1995). Indeed, as Slack and Lewis noticed (2002), global sourcing allows a firm to decrease its labor cost by entering a market with lower wages. However, the potential cost reduction as a result of global sourcing should not only be explained by the one of the labour cost but also by the one of the raw material and transportation, too often neglected. For example, if we focus on the deep-sea shipping costs, we would notice that they decreased by about 83% between 1750 and 1990 thanks to the great improvement in sailing ships (Crafts and Venables, 2001). Furthermore, there are other drivers that lead to global sourcing and deserve to be considered as well. Indeed, if we stare at Skinner’s point of view (1964, 1969), we could learn that a relevant manufacturing strategy, which includes the implementation of global sourcing, is able to make you more competitive not only in terms of cost but also in terms of delivery, quality, innovation, and flexibility. However, Skinner was not the only one to underline the better quality of the goods and the access to new technologies provided by global sourcing strategies. Indeed, the possibility for a firm to benefit from a better delivery and logistics performance, a better customer service as well as the stimulation of the competition between suppliers or the increase of the flexibility in production volumes have often been quoted in the literature (Monczka and Trent 1991; Birou and Fawcett 1993; Handfield, Rajagopal and Bernard 1994). Moreover, a potential reduced trade barriers (i.e., through the European union), the increase of the productivity and the presence in emerging markets should be mentioned as well in the list of advantages provided by global sourcing strategies making global sourcing practices currently indispensable to keep on competing with other firms. To be more precise, global sourcing enables a firm to increase its productivity by providing the opportunity to extend the effective work day. Indeed, global sourcing may allow you to benefit from the time zone differences worldwide. In other terms, by properly coordinating the activities of your firm, you will be able to work 24 hours a day. Then, to detail the potential presence in emerging market, by assuming that a large part of global sourcing practices is none other than low cost country sourcing and that the low cost countries are often the emerging ones, we arrive to the conclusion that global sourcing enables you, most of the time, enter emerging market. 4 However, if the major part of these advantages belongs to the economic field, global sourcing practices also provides improvements in overall supply-chain performance. Indeed, it may improve the firm’s inventory management as well as increase its access to skills and resources unavailable locally and its total supply capacity. 2.2 Included in a manufacturing strategy In this subtitle, two different perspectives should be understood. The most obvious one describes the fact that global sourcing belongs to the manufacturing strategy the firm implements whereas the induced one is the way that global sourcing should be used non exclusively but rather in combination with local sourcing. In order to detail the first perspective, we will refer to Hill (1985) who treated global sourcing as one of the key factors for manufacturing companies’ competitiveness. Moreover, these are the manufacturing problems he evoked: What are the critical factors of a manufacturing strategy' Where to source materials and components of the products' How to configure the last ones' Where to locate plants' Skinner also suggested that global sourcing could be none other than a major part of a manufacturing strategy, required by their corporate strategy. As for Slack and Lewis (2002), they distinguish two aspects of a location decision:  What are objectives of the firm while determining the manufacturing location' Cost minimisation is the major goal in finding the optimal manufacturing location. Hence, while taking the example of a retailing manufacturer, its location necessarily requires to be surrounded with much contact and therefore, finding an attractive location is therefore very expensive.  How many manufacturing locations are available to the firm' If we take this time the case of an electronics manufacturer, the number of manufacturing locations available to him is significant as he does not require especially high contact-operations. Consequently, he has to restrict it according to various criteria such as political risks, the currency and the logistics cost. 2.3 Case of Zara: a successful combined procurement strategy To illustrate the significant impact of globalisation on any company, we will now focus on Zara case. As you may know, this company belongs to the famous Spanish group called Inditex, which operates in the retail industry. First of all, one of the major features about Zara is that, the company went on producing most of its products in Spain or in Portugal until 5 lately. That is why it was known as an “exception to globalisation”. Furthermore, Zara was already told as providing excellent supply chains among the fashion industry at this time. Despite the considerable initial success of the company, Zara had to adjust its procurement strategy to sourcing from countries such as India, Morocco and Turkey. Indeed, accordingly to the progress made in those countries in term of rapidity, flexibility and ability to manufacture in an elaborate way high quality clothes, the former local sourcing company adopted with success a combined strategy of global and local sourcing. As a result, it is said that rather than Zara changes its manufacturers’ location, its competencies and jobs’ location has changed Zara (Nebahat Tokatli, 2007).This case serves as a benchmark to underline the current necessity for companies to adjust their strategy to their current environment which implies there the use of global sourcing practices. There should not necessarily induce a drastic change from an exclusive local sourcing to an exclusive global sourcing strategy but on the contrary, this example is to promote the global sourcing as an indispensable and non exclusive part of a manufacturing strategy. 3) Global sourcing success subject to many illusions and limits 3.1 Risks associated with global sourcing There are many different risks and costs to take in consideration while implementing global sourcing practices and more especially offshore outsourcing ones. First of all, those challenges were divided by Benders and Vos (1998) into two major categories: quantitative and qualitative. On the one hand, among the quantitative risks, figure the economic risks, the logistics risks, the quality risks as well as the information and communication risks. On the other hand, Vos (2004) mentioned the political, legal, ethnical, environmental and bureaucratic risks as part of the non quantifiable risks. Hence, according to Verma (2003), in the case of offshore outsourcing, a great understanding of the law as well as a considerable involvement in the local government are key elements to achieve these global sourcing practices successfully. Global sourcing practices could increase certain costs. Indeed, the total costs resulting from other activities of the firm could be increased by global sourcing initiatives accordingly to higher transportation and administration costs or higher levels of inventory (Markides and Berg, 1998). Furthermore, in the case of an offshore outsourcing strategy, economies of scales could unhopefully be lowered by the costly transition from making to buying your products without speaking about the potential loss of the product quality and lead time. Moreover, Levy (1994) suggested that some additional costly measures 6 would be required in that same case so as to correct the negative effect of global sourcing practices on the firm’s profitability. However, one of the greatest risks associated with global sourcing remains none other than the foreign supplier himself. Indeed, instead of intending to find the supplier who offers the lowest price, which is common mistake done by organisations; they should look for the best supplier and there the price should not be the only criteria (Monczka and Trent, 2002). Indeed, Parker (2001) added to this that it is the only way to ensure a stable supply chain (i.e., no shortfall) That is why it is strongly advised to visit the supplier because even if it is very expensive, the cost of not making it could lead to uncontrollable snowballs because of the poor quality of the end-product. 3.2 The myth of many firms stuck in an intermediate level of global sourcing According to the famous model of Robert Monczka and Robert Trent (1991), global sourcing is none other than the evolution of an international sourcing strategy through the following five levels development process: 1) Domestic purchasing only; 2) Foreign purchasing only as needed; 3) Foreign buying as part of the sourcing strategy; 4) Global sourcing strategies integrated across global business locations; 5) Global sourcing strategies integrated across worldwide locations and functional groups. First of all, the first three global sourcing levels have to be distinguished from the last two ones in the sense that the first three ones are only basic international purchasing (e.g., intermediate global sourcing levels) on the opposite of the last two ones that represent real global sourcing efforts. Now we have this major information about the global sourcing process, we will detail each of those four phases to achieve excellence in global sourcing. In the first stage of this model, companies purchase only from local suppliers involved in international sourcing and they have almost no need for foreign sourcing information. Then, firms often find themselves driven toward foreign purchasing (e.g., the second intermediate level of global sourcing) for different reasons such as the following:    the requirement of materials that no suitable local supplier could provide; the advantage of their competitors thanks to their global sourcing adoption; a potential supply disruption in the local market; 7     an eventual rapid change in currency exchange rates; a falling local supply base; potential inflation within the domestic market; the emergence of new and more profitable supply sources in terms of cost and quality. However, in this second stage, international sourcing remains usually limited and its use is only based on the firm’s needs. Then, the transition from this second level to the third one often happens as a result of the understanding by the firm that it could drastically improve its performance and thus its gains by focusing on its international procurement strategy. Main reasons for such a shift between those two levels could be potential lower purchase prices or any performance improvement thanks to international sourcing. Moreover, it is important to add that, at this stage of the process, top management commitment becomes one of the key elements for achieving successful global sourcing. However, at this point, strategies are not yet well coordinated across international purchasing locations and remain concentrated on price improvements at the expense of other performance improvements. Last but not least, the fourth level, as the first real global sourcing one, offers a firm coordinated procurement strategies across global business locations. Hence, it requires meanwhile worldwide information systems, high and advanced skilled personnel, good coordination and communication mechanisms, an organizational structure conducive to global integration and an executive leadership suitable for a global vision. Furthermore, this phase is about developing global sourcing agreement (e.g., an agreement across the whole company usually made with a supplier with global capabilities). These are the two major differences that distinguish both of real global sourcing phases: -on the opposite of the fourth level, the fifth one offers a firm not only coordination and integration among the purchasing locations but also among the functional areas such as marketing, engineering or purchasing; -similarly, on the opposite of the fourth level, firms performing at the fifth level intend to standardize their supply management processes and practices globally. As a result, the major requirements to achieve the highest global sourcing level are the fact that design and procurement activities have to be coordinated; the development of new products, new technologies; or it could be as well due to the sourcing of items and services to fulfil existing demand. The issue to conclude with this model is that only the companies that 8 succeed in this task of leveraging and coordinating their activities on a global basis will find success in global sourcing. On the one hand, for many companies, integrated global sourcing would be the best strategy to keep on competing in highly competitive markets. These are the ones which succeeded in reaching one of the two real levels of global sourcing (e.g., the fourth or the fifth one). On the other hand, many will never succeed in achieving excellence in global sourcing or will never even reach a real global sourcing level. They often remain stuck in intermediate global sourcing positions because of their weak abilities or of their lack of willingness. For them, it would not even be worth to try to implement a global sourcing strategy. This is the case of most small and medium-sized companies. In that case, it would be much more realistic to expect to reach an intermediate level of global sourcing such as the third one (“Foreign buying as part of sourcing strategy”). Hence, we can say according to this model that for those companies, global sourcing success would remain a myth in the sense that they would only find a limited success while trying to implement a global sourcing strategy. 3.3 Case of China sourcing: a dream that could turn into a nightmare While talking about China sourcing, Alan M. Field describes ones of the major myths around this topic in his article called “Sourcing in China”. The first of them is that “sourcing is easy”. It is the one we previously mentioned in the very beginning of our paper. He especially invites us to beware about what Chinese suppliers show us on Internet (i.e., potential pictures of labelled products). The second myth about China sourcing is mentioned in this same article by Michael Ksiazek, vice president of operations at ACCO Brands Co. Many companies think that China sourcing is so easy that sending samples to the Chinese manufacturer is enough to allow him manufacture their products whereas in reality, they also need to give a detailed products’ overview to Chinese factory workers and investors. Then, the third myth about China sourcing is that you do not need to carry on the inspection of the products sourced from China because it is Chinese suppliers’ role. Indeed, a common temptation of Chinese suppliers would be to replace some parts of the manufacturing product in order to lower their cost and increase their profitability and this is not without consequences given that the product would become in this case different than the one you previously ordered and then the one you intend to sell. There is a relevant piece of advice that Matteo gave in this article: “You need to have transparency back through your supply chain. You can’t just inspect the final product.”(Sourcing in China) To conclude, the fourth common illusion on this topic is about the transportation costs: monitoring them is not only 9 recommended but it could be as well considered as a strong necessity despite the distances because otherwise, you have no proof that your supplier intends to minimize them. To conclude, this example of the China sourcing takes place to show you that even the wellknown China sourcing has not only positive aspects but also to illustrate the great vigilance required while choosing a supplier. Hence, this case would serve as a benchmark to illustrate this relevant quotation from Monczka and Trent (2002) speaking about an organisation: “should perform due diligence by acting as if it were purchasing the supplier rather than the supplier’s output”. 4) Global sourcing has different variables of success 4.1 Global sourcing organisation The implementation of a well-structured organisation is, in the same time, a very challenging and broad task and yet necessary (Hartmann, 2008). Indeed, the first task in determining a good organisation for global sourcing consists in finding the good compromise between a centralized procurement strategy and a decentralized one given that the both are complementary. After making a relevant mix between the both, there is another important step in which the extent of what is to be made and bought should be determined, including the elaboration of different roles among the purchasing function. Otherwise, another global sourcing success criteria often highlighted in literature is none other than the development of good communication links as well as an appropriate information access, both concerning every member of the company. Mol (2004) encourages us to focus on the integration of the purchasing function with the other departments rather than on the impact itself of buying functions on the firm. In addition, Hartmann (2008) added the positive effect of a relevant information system on the results of the company. Moreover, while speaking about determining the best organisation for global sourcing, Van weele and Rozemeijer (1996) emphasized the necessity of recruiting within the purchasing department “well-trained” people that should have a strong character; be able to communicate and to work collectively as well. And this to structure this list of key elements in global sourcing, we could follow Mohr and Spekman (1994) division model. The first group identified according to this model is referred as “knowledge” and it involves many factors such as technical understanding, product knowledge and logistics qualities. The second one that regroups all “skills” is more abstract and includes the motivation, the creativity and a great sense of analyze to determine people qualities and defects. Many other points related to the organisation for global sourcing 10 are frequently mentioned in literature such as the ability to be flexible, innovative and reactive (Akbar and Lamming, 1996; Schorr, 1992). 4.2 Key elements to achieve excellence in global sourcing The difficulty of finding success in global sourcing could be illustrated by the simple fact of the accumulation of the complex features to adopt in order to be effective at Global Sourcing. 4.2.1 Monczka and Trent model Monczka and Trent established an ideal profile of firm with global sourcing practices to help firms implementing global sourcing strategies successfully. They highlighted seven main models of features (“Characteristics of Global Sourcing Excellence,” p. 30.): 1. Executive commitment to global sourcing This consists in the presence of a high skilled individual in charge of the overall success of the global sourcing practices implementation (e.g., an executive leader). He should in the same time be a good communicator to be able to introduce the chosen strategy to the board of directors and to the executive commitment and have great access to high level information to be able to discern the most successful global practices from the least successful ones. Furthermore, an executive steering committee should be established to monitor the process. Many different ways could be used by the firm’s leader to create an executive commitment to global sourcing such as the following ones: to introduce the implementation of global sourcing practices to each member of the firm as a priority in the planning strategy; to dedicate a high part of both the budget and the staff to support the establishment of global sourcing practices; to create global sourcing project teams. 2. Rigorous and well-defined process: This one should be broadly understood since it represents for any organization the basis to implement an integrated global sourcing. Furthermore, this rigorous system requires a “process owner” who would be the one in charge of the overall process. (e.g., suggest process improvements; draw conclusions from “lessons learned” at the end of each project). Various reasons could explain the use of a stringent global sourcing process. 11 Indeed, as the process members are used to a well-defined process, they learn in an easier and therefore quicker way. In addition, it enables an organization to align members and practices worldwide with broader corporate interests. Hence, a rigorous and well-defined process offers a company the possibility to struggle against the numerous differences between the locations (e.g., language, cultural and business practices, personnel competency...). The “subtle control” evoked by Takeuchi and Nonaka (1986) (refers to the process through which global teams are asked by their executive leaders to give regular updates and to follow a strict steps’ order. 3. Availability of required resources According to Peters and O’Connor (1980), different key resources can make a global process effective. Executives should ensure the availability of these key resources (e.g., budget, skilled staff, information, time and help from others outside the procurement process). Among them, the time is the one which is known in the literature as the most important and nevertheless, the least available (Monczka and Trent, 1983). Also, the personnel should get the right knowledge, skills and abilities. Last but not least, participants to the global process should have an easy access to appropriate information and be able to adopt a global vision while collaborating across functional groups, in particular engineering and procurement. 4. Integration through information technology Although this task appears to be evident to most companies, in reality, numerous are the ones to fail in it. Moreover, this difficulty appears to be all the more felt for companies that result from a combination between different units (e.g., merger and acquisition). One of the solutions to this problem is the creation of global data warehouses using along the entire company, coding schemes by attributing to a category number of sub-category number to each of the company’s essential good or service. Thus, while analyzing global sourcing opportunities, the efficiency of the access to relevant information is increased. Then, to share global sourcing information with each company member, some Intranets (e.g., Web-based systems) are to be created. 5. Supportive organizational design Organizational design refers to the “process of assessing and selecting the structure and formal system of communication, division of labour, coordination, control, authority and 12 responsibility required to achieve an organization’s goals” (D. Hellriegel, J.W. Slocum and R.W. Woodman, 2001). According to the model of Monczka and Trent, companies that intend to achieve excellence in global sourcing should get those three following major organizational design features: a formal executive committee to conduct the global process; an executive leader in charge of the overall process; a extensive reliance on teams to suggest and develop procurement strategies. Indeed, according to Trent’s study (2004) that took in consideration 172 US companies, the formation of teams remains a well-known increasing organizational design option. 6. Stuctured approaches to communication The communication in global sourcing practices is often difficult for different reasons (i.e., the dispersal of the participants worldwide, their different language, cultural beliefs). Hopefully, there exist many different methods to improve the communication links between participants such as regular strategy review meetings, videoconferencing, training meetings that gather members from each location or regular initiatives’ updates forwarded on the Intranet. However, all those initiatives would only become useful as long as the firm executives accept to make both time and budget commitments. 7. Methodologies for measuring savings The inability to validate savings (i.e., return on individual project investment, global suppliers’ leverage on purchasing location performance indicators) from global sourcing is too often neglected whereas it is not without consequences. Indeed, counting and confirming the global sourcing benefits is particularly difficult especially in term of inventory management and process consistency. That is why finance executives should agree on methods of reporting and confirming savings from global sourcing practices. Another solution to improve those methodologies for measuring savings could be the establishment of some regular meetings in which the executives would review current global sourcing savings as well as the expected ones. 4.2.2 Other literature insights However, the literary visions of those key elements to achieve global sourcing initiatives successfully diverge as what Vernon (1996) prioritized on the opposite of Monczka and Trent is the necessity to standardize a high quantity of the product which is expected to be sourced. 13 Moreover, Eng (2004) added that the use of International Procurement Organizations (IPOs) is another key factor to evoke while talking about successful implementation of global sourcing. Indeed, he explained that these organizations are useful in finding the appropriate suppliers for a given firm, by concentrating its efforts on the sourcing country. While taking the relevant example of China, resorting to those organizations is especially helpful because in such a country, there exist various markets and sub-markets and the suppliers take on the whole value chain of products, which all the more increases the difficulty of the process (Bose et al., 2008). 14 5) Conclusion In a nutshell, it is possible to reach success while taking global sourcing initiatives provided that they are established properly, which implies the requirement of many resources such as time, money and skills. Moreover, the use of global sourcing practices is obviously indispensable so as to go on competing with other companies given to the current context of globalisation. As a result, we could state that global sourcing is not only a way to find success but overall that nowadays, an organization could not be successful without adjusting to its environment that necessarily leads to global sourcing efforts. However, even if global sourcing is obviously a necessary part of a manufacturing strategy, trying to reach its highest level should not be an absolute for every firm. Indeed, most of the small and medium-sized companies would rather stabilize themselves in an intermediate level of global sourcing than focusing their efforts on the implementation of an illusory global sourcing strategy. “Illusory” is here used in the sense that most of those firms would not be able to reach their expectations while implementing such a strategy because it would not be the most appropriate one. Hence, we could say that success in global sourcing should not be considered as an absolute necessity. The general goal should not be to reach the highest level of global sourcing at all costs but rather to determine the appropriate level to reach according to our company characteristics and needs. Anyway, global sourcing strategies are accompanied with many risks that should not be neglected. And here, the Chinese example is a relevant overview of all those challenges a company should be aware while intending to implement such strategies. We could refer to the term “myth” while talking about sourcing in China since on the one hand, it became a common practice and on the other hand, it is nevertheless difficult. This is another myth about global sourcing: people are blinded by global sourcing advantages and do not pay enough attention to its risks. They believe mistakenly they could try this strategy but they often miss many steps in implementing it, which explains their failures. 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