Many purchasing organizations are being challenged to increase the level of "global sourcing" to tap into promising opportunities and to fend off competition. Unfortunately, many companies are ill equipped for the challenge: though global sourcing employs the same set of activities as domestic sourcing, there is also greater complexity. Based on our experience, most companies need to enhance the skills of their purchasing organizations to pursue global sourcing effectively. Although our research in this area is still under way, this article explores some issues in global sourcing encountered by our clients. The article is part of a series in Strategy & Business expounding upon the skills required in the business model that Booz-Allen describes as "balanced purchasing."

Capturing the full potential from suppliers has always been a challenge. To pull it off, successful companies have devised ways to effectively integrate the right suppliers into their business processes. In so doing, they have created powerful supplier relationships that simultaneously encourage cooperation and competition. The results of these best-practice relationships are demonstrable. But how are such relationships achieved? This article, a follow-up to 'Balanced Purchasing', describes the ability to define clearly what the authors term a supplier's "scope boundaries."

Editor's Note: Part 2 of series
Part 1: "Balanced Purchasing"
Part 3: "Setting Supplier Cost Targets: Getting Beyond the Basics"