Sourcing is the purchase of goods and services using the entire set of business processes. As discussed earlier the major question for a business is whether to outsource the function or perform it in-house (Chopra, Meindl: 433). It is very important for a firm to identify the business conditions under which outsourcing are preferable.
For instance, Zara’s apparel manufacturing uses a combination of sources both for European and Asian markets. At the same time it also outlines the difference between outsourcing and off-shoring. Off-shoring takes place when production is moved to offshore countries and this is where agility and the concept of Triple-A comes into play. For Zara agility is not a major constraint in its offshore operations, because it has adapted the market conditions, products/offerings, supply networks and technologies. The Triple-A concept (Lee 2004) is best utilized by Zara starting with Agility which is why Zara operates in more than 56 countries of the world with over 2,200 retail outlets. Zara is easily adaptable to the changing trends in the fashion industry and is highly responsive towards customers’ preferences through sourcing decisions. Zara’s parent company Inditex owns only 40% of the manufacturing while rest of the operations is outsourced because Zara knows the cost of adaptation and quick responses to changing needs. Alignment comes when better performance is expected as a return for better incentives. Zara’s enhanced communication and information system facilitates its vendors and receives key information regarding customers (Chopra, Meindl: 33). Thus, sourcing plays a key role in supply chain management for both, in-house and outsourced product acquisition.
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