Global Sourcing Strategies: A Framework for Lean, Agile, and Leagile
Abstract
:1. Introduction
2. Literature Review
- The current knowledge and utilization of lean, agility, and leagility cannot provide complete support to the supply chains in the circumstances of severe conditions.
- To achieve the supply chain sustainability in severe conditions, there is a need for a new framework to support the utilization of lean, agility, and leagility.
- Our developed framework can support lean, agility, and leagility to work better in severe conditions, like economic crisis, shortage of raw materials, or health crisis resulting from Covid 19, for example.
3. Research Methodology
3.1. Grounded Theory
3.2. Sampling
3.3. Interview Process
3.4. Interview Protocol
4. Development of the Framework
4.1. Open Codes
4.2. Axial Codes
4.3. Selective Coding
4.4. Framework of Global Sourcing Improvement
4.5. The Need for New Global Organization
- Organized relationships between an organization and some of its partners [74].
- Relationships between supply chain and another supply chain—not individual organizations.
- Some business associations for each industry, where the companies can participate to get better collaboration tools. For example, Elemica which is one of such associations for the chemical industry, enabling the participated companies to integrate their different enterprise resource planning “ERP” systems [68].
- The chambers of commerce in each country represent some kind of collaboration, where the companies can meet and collaborate together.
- We can consider also the trade unions, as a type of collaboration in business.
4.6. The Purpose and Aims of IRMO
- Searching on the internet for companies selling or buying their products.
- References from other business partners to work with a specific company based on previous experience.
- Business trips to other locations to visit companies seeking partnerships.
- Participating in associations gathering companies from the same industry.
4.7. Unique Character of IRMO
- IRMO is a legal body under the umbrella of the United Nations, while the e-procurement websites are operated privately.
- IRMO is a non-profit organization funded by the United Nations, while the e-procurement websites are for profit mostly and depend on subscriptions, percentage of each deal, and advertising opportunities on the site.
- IRMO is not a place of making deals, but just a data bank of information, which is in contrary of the websites of buying and selling any products—for example, E-buy, Amazon, or Alibaba.
- IRMO works globally to generate master data for the entire business worldwide, because the data base of IRMO is built on including all the information provided by the governments about all the companies operating legally in each country. In the e-procurement websites, the subscription is a choice for each company, so these sites are always limited in terms of participants.
- There is no guarantee about the liability of the companies participating in the e-procurement websites, any fake company can register and scam the people. IRMO is a United Nations organization, so only the legal businesses in each country are listed. Thus, there is no risk at all of dealing with fake or deceiving companies, but all the participants are real companies operating legally.
4.8. Functions of IRMO
4.8.1. Improving the Supply Chain Strategies Utilization by Facilitating the Collaboration
4.8.2. Legal Function
4.8.3. Global Data Bank
4.9. Preconditions for Establishing IRMO
4.10. The Structure of IRMO
- Europe: Antwerp—Belgium
- North America: Houston—USA
- South America: Rio de Janeiro—Brazil
- Africa: Cape Town—South Africa
- Asia: Shanghai—China
- Australia: Sydney
4.11. Key Processes in IRMO
- The country offices should gather all the information nationwide in collaboration, via the local chambers of commerce. Each chamber of commerce has the information of the companies working in the country. Thus, we ensure that participants are all officially registered in the countries they operate in.
- The information should include all the details of the legal companies, products, quality, and prices. This will be included in a specific template to ensure that all the information is organized always on the same format. Each company in the chamber of commerce has a registration number and this is a unique number for each organization to avoid any conflict. In the commercial registration of each company, there is already information about the products categories subject of business. Each company should provide the portfolio of detailed products and prices for marketing purposes.
- It will be the responsibility of each country office to verify the information and refine them perfectly to have an up-to-date record, and the coordination with the local chamber of commerce in each city can play a very important role to update the information perfectly. It is expected from the chambers of commerce to show a high level of cooperation with IRMO as a UN agency.
- The country office should classify the companies and products in a directory to be easy for selection and searching. This is one of the main responsibilities of IRMO, to present the massive amount of information in a portal, which can be used easily by the members.
- This information should be updated to the regional office of IRMO periodically. This is a very important step to have up-to-date information always regionally and globally as well.
- The information in the regional offices should be reported to the head office globally, thus we can have a single directory containing all the information required for outsourcing globally, and the companies can easily reach the best outsourcing solutions in each industry, within minutes, instead of searching for such a long time and at the end. No company can survey all the available sources globally, but it will reach some only. With using the proposed IRMO, any company can build reliable business relationships very easily and quickly. The system of IRMO enables the companies to survey all the outsourcing solutions worldwide and nominate the best within minutes.
4.12. Financing IRMO
5. Validation of Developed Framework
5.1. The Impact of the Framework on Lean, Agile, and Leagile Strategies Utilization
5.2. Possible Benefits of IRMO to the Supply Chains and the Global Economy
- It will eliminate the time needed to search for business partners, and will provide a very wide range of suppliers and/or customers in each industry, since the data bank will contain all the information of the companies worldwide.
- It will reduce the time needed for building trust between two partners, and this is because all the companies registered in the data base must be legal companies. Accordingly, there is no risk of dealing with unknown partners, but only the reliable companies operating legally will be registered in the database.
- It can help the supply chains to achieve the ultimate level of collaboration, with the selected business partners.
- It will be helpful, since all the supply chains worldwide can maintain a lower inventory level, because there is no risk of stocking out for the suppliers of any material. There will be always alternative options available in the data base, which is ready to supply immediately. This can represent alternative sourcing channels over time, so consequently the supply chains can reduce the inventory level and safety stock.
- The supply chains can operate effectively by eliminating the cost as much as possible. The data base will present all the companies in each industry with products and prices, so the decision maker can select always the best economical option.
- It will help the global economy to achieve the fair competition practice, however, all the companies can compete fairly by presenting their products and prices in the data base for all customers, and at the end, the customer can select which option is convenient to him.
- It will not only help the supply chains to reduce the cost of materials, but also to reduce the operational cost of the supply chain activities. However, we eliminate the time needed for searching for reliable partners and the time needed for outsourcing as well. Thus, the supply chains can hire limited number of procurement employees, and consequently the cost of human resources will be reduced also.
- It will play a very important role to control the prices of the commodities worldwide. IRMO will not do this function originally, because it has no power to instruct the companies to identify the prices of their products, but this will come automatically as a result of the fierce competition between all the companies worldwide. Each company will realize that the data base of IRMO contains all its competitors—not only regionally but worldwide—so each company will be very competitive to win the orders. The buyers always will have extreme scale of selections, and if the seller is not offering competitive prices, the buyer can get the material from another source easily. This competition will work always as (automatic controlling agent) of the prices.
- It can help to achieve significant improvement of the international trade. However, many companies used to get their raw materials from traditional sources of supply for decades, they do not know that there are so many alternative sources of supply, which may be much more economical for them. Some traditional companies also do not want to face a risk of trying new suppliers, or they do not have time to search for that. Finally, they discover that the new suppliers are not reliable enough, so they prefer the traditional sources which they deal with for years to avoid this risk. With the existence of IRMO, the sourcing process will be much easier and the companies can choose the best sources of supply always, and this will help the global economy to increase the international trade massively.
- As a result of the improvement of the international trade, the logistics industry could be the best beneficiary. Moving the materials locally and internationally will help the logistics industry to grow rapidly. If the companies can get cheaper sources of raw materials overseas than what they have locally, the international shipping industry can achieve significant improvement in that case.
- It will optimize the usage of the resources globally by better organization of the outsourcing channels. However, limited resources, especially during difficult times, need perfect control in order to share these resources together [89].
- It will help the world to achieve the best utilization of the nature resources available for mankind. As a matter of fact, we waste too much resources nowadays, because of the conflict goals of the different countries and thousands of supply chains. Each party looks for its immediate benefit only, without caring for the entire resources we have in the planet. When we have a single organization gathering all parties together in one entity, certainly we can utilize the limited resources of the planet in a better way.
- It can help the global economy to create more jobs as a result of improving international trade. The global economy is a chain of activities, and each activity affects the others directly or indirectly. If the international trade is improved, the production and logistics also will be improved as a result of that, consequently more jobs can be created, and much buying power will be added to the markets because the income of the new jobs will be spent in the markets again. This will increase the overall demand of the global economy entirely. It is a circle connected, so the similar concept of the supply chain is also applicable for the global economy.
- It can help the global economy prevent illegal business. As long as we have a single data base for legal businesses, we can recognize any illegal business very easily. The registration in IRMO will work as prequalification for any company worldwide, and thus any illegal business will not have the opportunity to work or operate on a large scale. Certainly, the illegal businesses will be there always, as long as we live on this planet, but it will not be as strong as what we currently have. IRMO will play a very important role to reduce the volume of illegal business significantly.
5.3. The Contribution of IRMO to the UN’s Sustainable Development Goals
5.4. The Proposed Framework and the Current Health and Economic Crisis
6. Conclusions
6.1. The Limitations of the Research
6.2. Recommendations for Further Research
Author Contributions
Funding
Conflicts of Interest
References
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Functional Areas | Participants Industries | Geographical Areas | Company Size | Participants Positions |
---|---|---|---|---|
Supply chain (70) | Manufacturing (40) | Middle east (50) | Over 1000 employees (70) | Senior managers (35) |
Sales (35) | Trading (20) | Europe (35) | 600 to 1000 (40) | Supervisors (45) |
Accounts (15) | Logistics (40) | China (20) | 200 to 600 (20) | Mid managers (70) |
Administration (10) | Constructions (20) | USA (20) | Below 200 (20) | |
IT (20) | Oil and gas (30) | Others (25) |
Question | Choice 1 | Choice 2 | Choice 2 | Choice 4 |
---|---|---|---|---|
1-Knowledge of strategies; lean, agility, and leagility | Good knowledge (62%) | Expert (17%) | Some information (16%) | Do not know (5%) |
2-implementation strategy | Lean (44%) | Agility (18%) | Leagility (15%) | All of them (23%) |
3-Number of years using strategy | 4–10 Y (38%) | 10–15 Y (29%) | More than 15 Y (15%) | 1–3 Y (18%) |
4-Highest priority of SC | Reducing cost (30%) | Cash flow (25%) | Responsiveness (24%) | Quality (21%) |
5-strategies benefits | Enhancing competitiveness (36%) | Minimizing inventory (23%) | Reducing order cycle time (22%) | Increasing flexibility (19%) |
6-Lean and agility relations | Complementary (64%) | Alternatives (29%) | Opposite (7%) | - |
7-Utilization of single strategy | Lean (45%) | Agility (30%) | Leagility (14%) | transformation process (11%) |
8-Enablers of SC strategies | IT (39%) | HR (25%) | Corporate management (21%) | integration (15%) |
9-Recommended strategy in uncertainty | Leagility (73%) | Lean (14%) | Agility (13%) | - |
10-Achieving leagility | Collaboration (53%) | Demand forecasting (25%) | Postponement (22%) | - |
11-Strategy change per product | Yes (54%) | Depending on products characteristic (31%) | No (15%) | - |
12-future challenges | Economic crisis (47%) | War threats (26%) | Energy problems (15%) | Currencies fluctuation (12%) |
13-Tools to overcome future challenges | Innovation (38%) | collaboration (29%) | HR improvement (19%) | government aids (14%) |
14-The role of IT | Must supported by Gov (35%) | Must be supported by HR (29%) | IT facilitates collaboration (25%) | It can work alone to overcome the challenges (11%) |
15-Difficulties of material sourcing | Finding the right suppliers (45%) | Gov rules (27%) | Collaborating with suppliers (23%) | Others (5%) |
16-Key functions of future | Harmonization of all functions (34%) | Manufacturing and innovative technologies (25%) | Sales (21%) | Global sourcing (20%) |
17-Satisfaction of global sourcing | Unsatisfied (45%) | Satisfied but needs improvement (26%) | Totally unsatisfied (20%) | Very satisfied (9%) |
18-Improving global sourcing | Innovative IT (32%) | Finding new suppliers (31%) | Standard rules to have reliable suppliers (19%) | Business process standardization (18%) |
19-Impact of improving sourcing on strategies | Ultimate support (50%) | Change of entire business environment (21%) | Improve some strategies (16%) | Vary from organization to another (13%) |
20-Ability of strategies to cope with future challenges | Need supportive tools and improvement (75%) | Need major change of strategies (23%) | Yes, they can work now (2%) | - |
Code NO | Category # 1 Lean | Category # 2 Agility | Category # 3 Leagility | Category # 4 Future Trends of the Markets |
---|---|---|---|---|
1 | Removing waste of SC (Q 1 and 2) [3,4,5] | Expediting the activities across the SC [32,63,66] | Combination of lean and agility to utilize the benefits of both (Q 1 and 2) [3,4,7] | The global markets are in continuous changes and this trend is expected to grow substantially in the future [1,13,14,15] |
2 | Following the most economical SC practice always [5,29] | Prioritizing the reduction of lead time even with higher cost [3,4,36] | Trading off between lean and agility according to the situation [3,4,66] | The economic and political situation globally could lead to difficult scenarios for the conduction of international business [1,13,14,15] |
3 | Best utilization of the available resources of the [3,4,5,34] | Achieving high level of customers satisfaction through agile deliveries [3,4,33] | Maintaining a generic stock for customization as per the request of the customers (Q 1 and 2) [3,4,33,34] | The SC which cannot keep up with the sudden and major changes of the global markets, will not be able to survive in the future [40,41,42,62,67] |
4 | Achieving the maximum possible profitability [3,4,5] | Requires high level of information technology usage for exchanging real time data (Q8) [50,68] | Requires high level of information technology usage for exchanging a real time data (Q8) [50,68] | There is essential need to reduce the impact of the future challenges of the global markets on SC (Q 13) |
5 | Avoiding unnecessary movement of materials across the SC [3,4,5] | increases the overall cost of SC [3,4,6,26] | Utilizing the stock in different purposes by storing it as raw as possible (Q 1 and 2) [3,4,6] | There are difficulties facing the organizations for implementing SC strategies for collaboration and outsourcing (Q 15) |
6 | Simplifying the business (Q 1 and 2) | Requires high level of collaboration with all business partners (Q 1 and 2) [31,33,38] | Requires high level of collaboration with all the business partners (Q 1 and 2) [31,33,38] | Lean, agility, and leagility are key strategies SC in current circumstances, but they need supportive tools to work better in the future (Q 19 and 20) |
7 | Just in time production (Q 1 and 2) [3,4,6] | Reducing the lead time to the end customers and considering this as top competitive advantage [3,4,6,26,38] | Depending on the pull strategy to trigger the customization process (Q 1 and 2) [3,4,6,26,38] | The information technology is very important tool to support the SC to overcome the future changes and challenges of the global markets [50,68] (Q 14) |
8 | Pull strategy (Q 1 and 2) [3,4,6,26,38] | Keep up with the dynamic business environment | Using the postponement technique (Q 1 and 2) [3,4,26] | |
9 | Kanban technique (Q 1 and 2) [3,4,6] | Market oriented philosophy (Q 1 and 2) [38,66] | Innovative approach of integration of lean and agile principles (Q 1 and 2) [7,33,69] | |
10 | Continuous improvement (Q 1 and 2) [3,4,6,26,38] | Requires well trained and professional workers to operate the system perfectly (Q 1 and 2) | Requires well trained and professional workers to operate the system perfectly (Q 1 and 2) | |
11 | Reducing the lot sizes and eliminating the over production (Q 1 and 2) | Can be useful for the SCM in difficult times (line 164) (Q 9) | Can be useful for the SCM in difficult times (Q 9) | |
12 | Production leveling (Q 1 and 2) | It maybe not enough to work alone in the severe conditions (lines 167–168) (Q 9) | It maybe not enough to work alone in the severe conditions (Q 9) | |
13 | Require high level of information technology utilization for exchanging a real time data (Q 8) [68] | It requires high level of speed and flexibility within the SC (Q 1 and 2) [38,66] | It requires high level of speed and flexibility within the SC (Q 1 and 2) [38,66] | |
14 | Offering competitive prices to the customers [3,4,6,26,38] | Ideal for the SCs dealing with products having short life cycle (Q 1 and 2) [3,4] | ||
15 | Maintaining high level of quality (Q 1 and 2) [3,4] | |||
16 | Respecting people and their safety (Q 1 and 2) [3,4] | |||
17 | Focusing only on the activities which create value to the customers [3,4,5] | |||
18 | Requires well trained and professional workers (Q 1 and 2) [5] | |||
19 | Associated with longer lead times than the agile strategy [3,4,6,29] | |||
20 | Lower flexibility while having a decision due to the cost restrictions [3,4,6] | |||
21 | Requires high level of collaboration with all the business partners (Q 1 and 2) [3,4,5,6] | |||
22 | useful for the SCM in difficult times [3,4,6] (Q 9) | |||
23 | It maybe not enough to work alone in severe conditions (Q9) |
Phenomenon | Category | Open Code |
---|---|---|
Managing future supply chains trends—utilization of lean, agile, and leagile strategies | 4 | 4-5-6 |
Lean, agile, and leagile strategies can be useful for the supply chain management in different circumstances | 1 | 22 |
2 | 11 | |
3 | 11 | |
4 | 6 | |
Lean, agile, and leagile strategies cannot work alone in the presented scenarios developed by the author | 1 | 23 |
2 | 12 | |
3 | 12 | |
4 | 6 | |
Lean, agile, and leagile strategies require high level of information technology support | 1 | 13 |
2 | 4 | |
3 | 4 | |
4 | 7 | |
Lean, agile, and leagile strategies require well trained and professional workers to operate the supply chain perfectly | 1 | 18 |
2 | 10 | |
3 | 10 | |
Lean, agile, and leagile strategies require high level of collaboration with all the business partners in frame of supply chain | 1 | 21 |
2 | 6 | |
3 | 6 | |
4 | 5 |
Element | Axial Code 1 | Axial Code 2 | Axial Code 3 |
---|---|---|---|
Phenomenon | Managing future SC trends and utilization of lean, agile, and leagile strategies | Lean, agile, and leagile strategies can be useful for SCM in difficult times | Lean, agile, and leagile strategies cannot work alone in severe conditions |
Casual conditions | Current knowledge and utilization of lean, agility, and leagility cannot provide complete support to SC in the severe conditions (proposition 1) | Lean, agile, and leagile strategies help the SC to be effective and responsive | The dramatic changes of the global markets require more effective and innovative tools for managing SC |
Context | The continuous changes of the global business environment currently and in the future, made it essential for the decision makers to search for new supportive tools to enable the SC strategies to cope with future trends of the global markets | Lean, agile, and leagile strategies are strategies aiming to satisfy the customers | The severe conditions need a new framework for managing future SC |
Action strategies | To sustain the SC in the severe conditions, there is a need for new framework to support the utilization of lean, agility, and leagility (proposition 2) | It is recommended to implement lean, agile, and leagile strategies in SC | Developing a new framework for managing future SC under different circumstances, via utilization of three considered strategies |
Consequences | Our developed framework can support lean, agility, and leagility to work better in the severe conditions (proposition 3) | Improving the SCM practice | To handle the SC and managing SC in severe conditions |
Element | Axial Code 4 | Axial Code 5 | Axial Code 6 |
---|---|---|---|
Phenomenon | Lean, agile, and leagile strategies require high level of IT support | Lean, agile, and leagile strategies require well trained and professional workers to operate SC | Lean, agile, and leagile strategies require high level of collaboration with all business partners in SC |
Casual conditions | The IT is required for exchanging real time data in the SC | SC strategies cannot be implemented without well trained and professional people | lean, agile, and leagile strategies cannot be implemented without collaboration with all business partners in SC |
Context | The IT is an essential tool for implementing lean, agile, and leagile strategies | Implementing proper SC strategy is a crucial factor for business success and success of SC | The collaboration enables the SC partners to achieve value chain across the SC |
Action strategies | Implementing advanced IT in SCM and operations | The human resources must be trained before implementing considered strategies in frame of SCM | Establishing effective collaboration with all business partners in SC |
Consequences | Improving SCM | Proper implementation of the principles of SC strategies in frame of SCM | Improving the SC performance |
Question | Choice 1 | Choice 2 | Choice 2 | Choice 4 |
---|---|---|---|---|
Development of business environment and strategies | must utilize strategies (73%) | Depends on market trends (16%) | To some extend utilizing strategies (16%) | No relation (3%) |
Need of framework supporting strategies | Essentially needed (65%) | Depends on business stability (22%) | Needed but not essential (11%) | No need (2%) |
Proposed framework and improving strategies | Definitely will help (78%) | To some extend (13%) | Depends on future scenarios (9%) | It will not help (0%) |
Proposed framework can change the nature of global sourcing | Significant change (52%) | It can help to improve it (37%) | Some kind of improvement (11%) | It will not improve it (0%) |
Proposed framework values to strategies | Definitely support strategies (84%) | Depends on professional manpower (9%) | It can work only in the severe conditions (5%) | It has limited support to strategies (2%) |
Implementation obstacles of the framework | Needs lot of efforts for promotion (60%) | Resistance to use it (17%) | Difficult to standard rules worldwide (17%) | Others (9%) |
Framework benefits | Enriching lean, agility, and leagility (32%) | Best practice of (31%) | Increasing global sourcing reliability (28%) | Others (9%) |
Suggestions for improving the framework | There are some areas (55%) | It is perfect (31%) | I do not know (14%) | - |
© 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Share and Cite
Rashad, W.; Nedelko, Z. Global Sourcing Strategies: A Framework for Lean, Agile, and Leagile. Sustainability 2020, 12, 7199. https://doi.org/10.3390/su12177199
Rashad W, Nedelko Z. Global Sourcing Strategies: A Framework for Lean, Agile, and Leagile. Sustainability. 2020; 12(17):7199. https://doi.org/10.3390/su12177199
Chicago/Turabian StyleRashad, Waleed, and Zlatko Nedelko. 2020. "Global Sourcing Strategies: A Framework for Lean, Agile, and Leagile" Sustainability 12, no. 17: 7199. https://doi.org/10.3390/su12177199
APA StyleRashad, W., & Nedelko, Z. (2020). Global Sourcing Strategies: A Framework for Lean, Agile, and Leagile. Sustainability, 12(17), 7199. https://doi.org/10.3390/su12177199