Global sourcing as defined by Tim Minahan Aberdeen Group research analyst in the August 14 Aberdeen Abstract, "Global Sourcing: What You Need to Know to Make It Work," is the process of identifying, evaluating, negotiating and configuring supply across multiple geographies in order to reduce costs, maximize performance and mitigate risks. Factors that must be understood and balanced can be segmented into six categories: material costs; transportation costs; inventory carrying costs; cross-border taxes, tariffs and duty costs; supply and operational performance; and supply and operational risks.

To understand and manage these factors, supply managers must stay abreast of tariffs, trade regulations and geopolitical landscapes that are constantly in flux. Understanding and optimizing the total cost of offshore sources also requires supply managers to have a solid understanding of the Harmonized System (HS) Code and International Commerce Terms (Incoterms). Minahan concludes, "Just as the best financial portfolio managers rely on market intelligence and tools for analyzing financial vehicles, supply managers must have access to current information on global supply markets, as well as the proper methodologies and analytical tools to make sense of such information."

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