International Procurement: Relation To Project Procurement Management

Unique Aspects of International Procurement Institution: Course: Name: Date: Unique Aspects of International Procurement According to Kotabe and Murray (2004), organizations around the world are looking for strategies of strengthening their manufacturing and supply chain management by seeking sources outside their local countries. This is influenced by factors such as transport costs, domestic labor force needs, and availability of low-cost sources. Increased global competition has pushed most companies to devise and implement international purchasing strategies that result in quality optimization and price reduction. The international purchasing strategies are meant to suit organizations’ goals in relation to satisfaction, production life cycle, flexibility, and profitability. International purchasing strategy is an important competitive tool for organizations interested in globalization. It is an approach used in acquisition of goods and services which focuses on global supplies other than the local ones. International procurement (IP) is a form of international purchasing but differs in various ways. It comprises of organizational strategies aimed at making use of materials in various parts of the world. It includes sourcing strategies made up of integration and coordination of supplies (raw materials, design, processes, and technologies) across the world through various purchasing, processing, and operating locations. Today, there is an increase in economic interdependence among countries referred to as economic globalization. Economic globalization can be witnessed by the high rate of cross-border trade in goods and services in the recent past years (Van Weele, 2010). It is a phenomenon that requires manufacturers to establish an efficient supply chain and minimize resources, improve quality, and initiate innovation by making use of international resources. As globalization intensifies, international procurement becomes a crucial differentiator and a competitive factor for organizations in the demand-driven global value chain. The aim of this paper is to identify the most significant aspects of international procurement that make it a necessity in today’s multinational corporations. Discussion International procurement can be defined as a centralized sourcing strategy for multinational organizations. In this case, the corporation or companies are after economies of scale through standardization and benchmarking in all its operative units (Kotabe & Murray, 2004). In other words, IP is an integration and coordination of supplies (raw materials, design, processes, and technologies) across the world through various purchasing, processing, and operating locations. In an IP perspective, organizations are bound to encounter a lot of traveling, strict regulations and control, change in monetary policies, communication barriers, multiple cultures, and time differences (Hult, Hurley, Giunipero, & Nichols, 2000). Organizations that have implemented international procurement strategies must comply with the operational requirements that affect international purchasing and be able to manage complex functionalities and coordination. International purchasing involves the use of worldwide resources or acquisition of the highest q...