International/Global Procurement/Sourcing

Internationalization affects naturally companies’ procurement. In terms of international procurement there are number of concepts. In English literature there are terms in use such as global sourcing, international purchasing, offshore sourcing and international procurement.

In Finland, international procurement is often referred to global sourcing term. However, it should be noted that global sourcing is a more advanced form of international procurement. Global sourcing include among other things cooperation between different parties, for example, through common technology. Global sourcing is increasingly becoming a strategic solution. In this case, emphasis is on improving proactive or predictive competitiveness through, among other things, careful supplier selection, evaluation and development of suppliers.

Products and services are acquired more and more outside own country. Thus one exploits cost differences between different countries. When an area of ​​operation is the whole world instead of Finland, supply chain management is more difficult. Regardless of the distances, products must be in agreed place on agreed time as agreed. Naturally, the communication between organizations situated in the different parts of the world increases.

Global sourcing increases procurement professionals’ needs for more skills. For example, planning and coordination of goods deliveries need special attention because of the long transport distances and customs regulations. In international procurement one must pay attention to currencies, taxation and cultural differences between people. Management of procurement, in turn, requires familiarization with documents such as certificates of origin and insurance, letter of credit as well as import and export licenses used in the international trade. Buyer should set its own terms of procurement, whose suitability for international trade, format and legal issues are to be checked.