Global sourcing strategy and resource reallocation in MNCs

The case of the Japanese multinational corporation

Abstract

In recent years, Multinational Corporations （MNCs） are rapidly increasing purchasing and procurement as they expand their plants to explore global markets and facing significant challenges for managing increasingly complex global operations in Asian countries. In particular, as the manufacturing technology of suppliers in China has made rapid progress and the supply base has been well developed, the number of MNCs that set up the International Procurement/Purchasing Office （IPO） for doing global sourcing in China is increasing. This paper aims to discuss the development and evaluation of the Chinese IPO according to the headquarters’global procurement strategy development. We clarify the IPO deployment process and the evolution of its roles, to discuss the roles played by an IPO at the different process of evolution and the change of roles over time. We also consider factors of the evolution. We find that the purchasing and procurement department at the headquarters and the Chinese IPO allocate international functions and share roles in global procurement, the IPOs carry out global procurement while proactively involving collaboration and interaction with headquarter and foreign subsidiaries.