Skip to content
Product cover

Rethinking Procurement in the Era of Globalization

October 1, 2008 | Prof. Frank A.G. den Butter fbutter@feweb.vu.nl , Mr. Kees A. Linse kees.linse@shell.com | Strategy

The role of procurement within global companies has changed dramatically over the past 25 years from that of simply buying goods and services to overseeing an integrated set of management functions. This brings new challenges and opportunities to procurement. Offshoring and the increased emphasis on specialization and fragmentation of production enhance the strategic character of procurement decisions. Increasingly, procurement decisions have become intertwined with strategic management in general. In this article, the authors discuss the changes in procurement from the perspective of transaction cost economics. They separate transaction costs into “soft” and “hard” costs and differentiate between the internal and external factors that affect these costs. In making procurement decisions, the authors argue, managers need to consider the full range of cost elements. In addition to traditional transaction costs such as transport costs and tariffs, managers need to recognize such elements as cultural and legal differences, government regulation, social preferences, environmental issues, political stability and risks involved in unethical business behavior. The authors argue that knowing the risks and opportunities of the different exposures is a critical management competence. Although management decisions originate in many different parts of the company, procurement managers need to keep a close eye on the various cost exposures and flag concerns as they arise. Procurement, therefore, will need to become more closely connected with strategic decisions throughout the company. This broader view represents a major extension of the concept of total cost of ownership in procurement decisions. Global sourcing creates many new opportunities for value creation, which well-run companies must learn to take advantage of.

Purchase Options

Educator and Student Discounts Available. Learn more »

  BENCHMARKS  
Loading Time: Base Classes  0.0012
My Controller Construct  0.0005
Build Nav  0.0005
Controller Execution Time ( Products / Route )  0.1364
Total Execution Time  0.1377
  GET DATA  
No GET data exists
  MEMORY USAGE  
1.5658 MB
  POST DATA  
No POST data exists
  URI STRING  
store/rethinking-procurement-in-the-era-of-globalization
  CLASS/METHOD  
products/route
  DATABASE:  MITSLOAN_DEV   QUERIES: 68  (Hide)
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0006  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '93666367f0b82f4f66dc8943817d5dfb'
ORDER BY `created_at` DESC 
0.0003  

SELECT SQL_CALC_FOUND_ROWS cat_id
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `url_friendly` =  'rethinking-procurement-in-the-era-of-globalization'
AND `parent_id` =  1 
0.0080  

SELECT c.parent_id, c.format_id
                    FROM products AS p, products AS c
                    WHERE p.prod_id = c.parent_id AND
                        c.avail_id IN ('A','B','D') AND
                        c.type_id = 'V' AND
                        (
                            c.sku = 'rethinking-procurement-in-the-era-of-globalization' OR
                            if(c.format_id = 'Certificate', '', p.url_friendly) = 'rethinking-procurement-in-the-era-of-globalization'
                        )
                    LIMIT 1 
0.0007  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  987 
0.0003  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '987' 
0.0003  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '987'
ORDER BY `sort` ASC 
0.0001  

SELECT `cat_id`
FROM (`product_categories__products`)
WHERE `prod_id` =  '987' 
0.0001  

SELECT *
FROM (`product_flags__products`)
WHERE `prod_id` =  '987' 
0.0002  

SELECT `sku`
FROM (`products__xsell`)
WHERE `prod_id` =  '987'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0992  

SELECT `products`.`parent_id`
FROM (`transaction_lines`)
JOIN `products` ON `products`.`sku` = `transaction_lines`.`sku`
JOIN `product_categories__products` ON `products`.`parent_id` = `product_categories__products`.`prod_id`
WHERE `products`.`avail_id` =  'A'
AND TO_DAYS(transaction_lines.updated_at) < (TO_DAYS(NOW()) - 90)
AND `product_categories__products`.`cat_id` IN ('249') 
GROUP BY `products`.`parent_id`
ORDER BY COUNT(*) DESC
LIMIT 6 
0.0002  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '361' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '361' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '361'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '3961'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '35' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '35' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '35'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '179' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '179' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '179'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '489' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '489' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '489'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '2465' 
0.0001  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '2465' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '2465'
ORDER BY `sort` ASC 
0.0003  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '987'
AND `kind` =  'image_600x600'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0001  

SELECT *
FROM (`media`)
WHERE `media`.`media_id` =  '480' 
0.0001  

SELECT *
FROM (`mime_types`)
WHERE `mime_types`.`extension` =  'jpg' 
0.0001  

SELECT *
FROM (`media_metadata`)
WHERE `media_id` =  '480' 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '987'
AND `kind` =  'gallery_image'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0002  

SELECT *
FROM (`products`)
WHERE `avail_id` IN ('A', 'B', 'C', 'H') 
AND `parent_id` =  '987'
AND `type_id` =  'V'
ORDER BY IF(position = 0, 1, 0) ASC , `position`, `title` 
0.0001  

SELECT `c`.`format_id`, `c`.`price`, `c`.`sale_price`
FROM (`products` AS c)
WHERE `c`.`prod_id` =  '988'
LIMIT 1 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '988'
AND `kind` =  'thumbnail'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0002  

SELECT `product_categories__products`.`cat_id`
FROM (`product_categories__products`)
JOIN `product_categories` ON `product_categories__products`.`cat_id` = `product_categories`.`cat_id`
WHERE `product_categories__products`.`prod_id` =  '987'
AND `product_categories`.`parent_id` =  1
AND `product_categories__products`.`cat_id` NOT IN (1, 261)  
0.0004  

SELECT `cat_id` AS id, `parent_id` AS parent, `status_id`, `name`, `description`, `url_friendly`, `page_title`, `meta_keywords`, `meta_description`, `position`, `updated_at`
FROM (`product_categories`)
WHERE `cat_id` != 1
ORDER BY `parent_id`, IF(position = 0, 1, 0) ASC , `position`, `name` 
0.0003  

SELECT *
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `parent_id` =  1
AND `cat_id` NOT IN (1, 261) 
ORDER BY `name` 
0.0002  

SELECT *
FROM (`site_settings`)
WHERE `option_key` =  'announcement' 
  HTTP HEADERS  (Show)
  SESSION DATA  (Show)
  CONFIG VARIABLES  (Show)