6. DISCUSSION AND CONCLUSIONS
6.4 Suggestions for future research
Some interesting opportunities for future research arose during the process. The context of cost management practices in global sourcing still requires further research, especially in finding adequate ways to manage the costs with the limited resources of SMEs. Even though sourcing in SMEs have raised increased interest among practitioners and academics over past years, empirical findings clearly emphasizes the need for further studies of global sourcing practices in SMEs. In order to narrow the research gap, a larger empirical sample, for instance in the form of survey, would provide useful insights of how SMEs manage the costs of global sourcing. Furthermore, many technological firms are doing business in project- based environment, following make-to-order or engineer-to-order manufacturing processes that are based on specific customer projects. These factors set different challenges into global sourcing management and especially for strategic cost management. Due to the limitation of this thesis, these factors were only shortly acknowledged on theoretical framework, leaving a gap for further research in this area.
Another important notification is the company policies and relationship between the parent company and their subsidiaries. This study acknowledged the elements and challenges of cultural differences and building trust in global business but further research of the collaboration within company group in global business is needed. After all, even within one corporation can exist many branches that have own profit targets and business processes.
Elements such as profit targets, transfer pricing and transparent pricing between internal braches has an effect of the interactions between parties in global business. Therefore development and standardization of internal processes across business units and company group, and their impact on success of global sourcing and cost management, are rather interesting questions to address in future studies and would also offer a great research topic to continue discussion of the findings of this study.
In addition, empirical research revealed that there are strategic reasons that companies are encouraging business units and subsidiaries to buy and sell in-house, as the capital stays within the company group. The aspects of how to find a balance between intrafirm transfers and outside sourcing and choosing firm policies were not discussed. This leaves an interesting and important research gap that would provide new valuable information of the synergies and relations between global sourcing strategy and business strategies in a company group.
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APPENDICES
Appendix 1. Interview questions
Purchasing organization
What kind of purchasing organization does your company have?
How are the purchasing decisions made and by whom?
What kind of purchasing tools does your company use?
How the suppliers and products are chosen? And by whom?
Are purchasers involved on product design phase together with design engineers?
Supplier relationships
Does your company do more competitive bidding or collaborative purchasing?
Should the number of suppliers be reduced or increased? Why?
Supply strategy
Does your company have a supply strategy and is it in the written form?
What kind of elements are included in the supply strategy?
Is the supply strategy included in the firm’s business strategy?
Outsourcing
How are the outsourcing decisions made? And on what basis?
What kind of goals and objectives does your company try to achieve through outsourcing?
What kind of problems and risks are related to outsourcing?
What is the role of costs in outsourcing decisions?
Cost Management
What cost management methods are applied in the company?
How the cost data for project calculations and customer quotations is collected?
How many per cent of project cost expenditure is derived from purchases?
How often the project profit/expenditure calculations fail?
How often do you ran into unexpected costs that could not be anticipated in the beginning of project? What are these costs?
What information is needed more to evaluate cost spend better?
What are the biggest challenges in (supply/project) cost management in the company?
Global Sourcing
How do you see China sourcing currently and in the future?
Based on experiences, does China sourcing offer cost benefits compared to manufacturing/purchasing from Finland/EU?
What are the biggest challenges in China sourcing?
What are the benefits that your company get from China sourcing?
What are the reasons China has been selected over other possible countries?
Appendix 2. Focus group topics.
Product group categorization based on Kraljix’s purchasing portfolio:
- Low cost/low risk items - Low cost/high risk items - High cost/low risk items - High cost/high risk items
Vendor categorization based on product categorization.