Consolidating foreign subsidiaries

Italy’s Alfa Romeo and Japan’s Nissan share the production of certain critical car components that they could not produce cost-effectively on their own.General Motors is increasingly involving suppliers early in the design process in order to ensure better quality, lower cost, and “just in time” production.Is the company making good use of opportunities for concerted action among different divisions and/or subsidiaries?Combining the supply requirements of different divisions can increase the corporation’s total buying clout.When an automotive parts maker analyzed its sintered metal components supply market, from which it had been sourcing for years, it discovered that political instability was jeopardizing its supply. Vendor mix, extent of contractual coverage, regional spread of supply sources, and availability of scarce materials all contribute to the company’s supply risk profile.

Whenever a manufacturer must procure a volume of critical items competitively under complex conditions, supply management is relevant.Others that already source on a global basis must learn to cope with uncertainties and supply or price disruptions on an unprecedented scale.Instead of simply monitoring current developments, management must learn to make things happen to its own advantage.Some companies have already responded to the growing pressures.For example: To ensure long-term availability of critical materials and components at competitive cost, a host of manufacturers will have to come to grips with the risks and complexities of global sourcing.

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