Back to reality Essay Example | Topics and Well Written Essays - 2250 words - 1

Back to reality - Essay Example The primary focus of this paper, therefore, is to examine potential challenges that organizations may encounter while developing sourcing strategies and the issues they would need to consider developing relationships with key suppliers, and providing suggestions about how these problems might be addressed or mitigated. Background The firms in Europe and US often outsourced Asian countries with lower production cost such as china which is estimated to host over 6600 companies which have been outsourced there (Wright, 2009). As such, it is common to have a firm dealing with electronics, but it has subcontracted and outside source to handle the transport and logistics of the finished products to the market, another case can be a firm dealing with vehicles, but it only supplies the parts and subcontracts an outside source to deal with the assembling. This, however, does not come without challenges, a firms relationship with its suppliers is hence vital in promoting productivity and effec tiveness, having a third part supply resources or services that are critical in the final products of the firm requires considerable mutual trust and understanding. It is hence incumbent of any organization to apply the best and most practical sourcing strategies to meet their goals and objectives. Sourcing strategies by definition are the process an organization undertakes to ensure they have the best suppliers and they nurture the supplier relationships to maximize the value for the firm (Rendon, 2005). As such, most organizations have sourcing programs that are unique to their needs, services or the goods offered, notably while, some have deliberately puts these strategies others use them without being aware of it. Such is to say that organizations have sourcing strategy whether they know it or not, this is because owning to the nature of their business, over the year a firm will repeatedly uses the strategies that have proven successful in retrospect and by so doing will be foll owing a covert sourcing strategy. Like any other strategy, a sourcing strategy can be; â€Å"Strategic†, ergo effective, goal and objective oriented, on the other hand, depending on the competence of those managing the firm, it can be ineffective and inefficient. Naturally, each is an ideal extreme since no firm can be very efficient and neither can any firm be fully inefficient and yet continue to exist (Wheaton, 2008). As such, most strategies lie somewhere between with the best being closest to efficient and vice versa, sourcing program can either be â€Å"strategic† or meet its goals and objectives or it can be unproductive, ineffective, and poorly planned (Wheaton, 2008). Considering that the cost, quality and effectiveness of the goods or raw materials a firm is supplied with is directly reflected in its financial and operational results, it is only natural that thought and effort and time be devoted in the understanding of the various challenges that firms may e ncounter in the process and their possible solutions. Challenges and Solutions Creating Competition One of the considerations a firm needs to make before it commences any business transaction with supplies or outside sources is the potential for the supplier to become competition in posterity. This is because by taking these contracts,