Global sourcing in New Zealand manufacturing firms: A quantitative investigation

Abstract

Global sourcing is a resource acquisition strategy that has created much interest in recent years. As firms strive to remain competitive in an increasingly challenging business environment, many have looked for suppliers outside of their home country in order to develop competitive advantages in their domestic markets. Prior research has shown that significant benefits can be gained from the international integration and co-ordination of their purchasing activities. The aim of this dissertation is to investigate the incidence and application of global sourcing in New Zealand manufacturing firms. A review of the literature relating to the philosophy of supply chain management (SCM) provides the foundation for a discussion of global sourcing. The global sourcing literature focuses heavily on foreign countries, particularly the United States of America. This investigation aims to improve the deficiency that exists in this area, by examining global sourcing within a different context. A quantitative research method in the form of a web-based survey was conducted in this investigation. The data that was obtained from the survey was statistically analysed and a number of results were gained. These results were then discussed and reconciled with the literature with the purpose of determining whether they are consistent with what has already been established. Three key findings of this investigation are highlighted. Firstly, the level of global sourcing strategy pursued by New Zealand manufacturing firms is low, which may indicate a limited ability or need to carry out higher, sophisticated levels of global sourcing strategy. Secondly, New Zealand manufacturing firms have been motivated to pursue global sourcing primarily by 'cost reductions / price benefits'. This reflects the extent to which less expensive labour, less restrictive work rules and lower land and facility costs have enticed many to look at global suppliers. Finally, the major barriers that have caused difficulties for New Zealand manufacturing firms in their pursuit of global sourcing have been identified as 'exchange rate fluctuations' and 'longer lead times and lengthened material pipelines'. This reflects the impact that market uncertainties and geographical isolation can have on the ability of firms to successfully pursue global sourcing.