eThesis - School of Business electronic theses

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In this paper I set out to discover how global firms ensure that sourcing activities are aligned with corporate strategy. In order to understand this, I broke the problem down into three specific questions, which were:

1) How does strategy flow through the sourcing departments of large firms? 2) What hurdles do sourcing departments face when trying to implement corporate strategy? 3) What tools are available in improving the alignment between corporate strategies and sourcing activities?

Specifically, I wanted to answer these questions by using the example of a real life case company, and was fortunate enough have in-depth access to a large European manufacturing and engineering firm (referred to as Company X) which has implemented global sourcing operations.

I answered the first question by developing a model of how strategy flows through the sourcing operations of large firms. In order to do so, I studied both the relevant literature (discussed in detail in Section 2) and the real-life operations of Company X. My model, referred to as the strategy flow model throughout the paper, was by no means perfect or inclusive of every single factor involved in that very complex process, but it certainly helped to set the framework needed to answer the latter questions.

Interviews with employees of Company X provided answers to the second question. The major hurdles faced by sourcing departments when trying to implement corporate strategy were identified as (1) the difficulty in balancing the need of global leveraging with the need for local responsiveness, (2) challenges faced by data quality and availability, and (3) communicating corporate strategy and initiatives throughout the organization.

Interviews with employees of Company X also helped to answer the third question. The tools used by the firm to align sourcing activities with corporate strategy were directly related to the hurdles identified in the second question. Regarding the global vs. local conundrum, Company X has successfully implemented a matrix-structured category management approach. Regarding the issues related to data quality and availability, Company X has taken actions such as installing well-defined processes and creating specific job roles which focus on sourcing process management. Regarding the issue of communicating corporate strategy throughout organizations, Company X had found great success through the use of a visual tool which depicts the major elements of their strategy (such as vision, targets, industry trends and major initiatives).

The vast majority of this research was completely focused on a single firm's sourcing department. This means that while it allowed for great depth in explaining the situation of one firm, there are limitations in being able to generalize the findings to other functions, firms or industries. For that to be done, future quantitative analyses could be completed which would ask similar (but more generalizable) questions across a much wider data set.