Critical issues in supplier selection in internazionalized enterprises

The arising complexity of inter-firm relations is one of the most relevant
phenomena introduced by the globalization process. Not the single
enterprise but its vertical and horizontal groups, alliances, chains are
the protagonists of the actual competition process and the leverages of
competitive advantage. Such networks - made up of goods, services,
information
and corresponding cash flows exchange - now have an international
strategic orientation. This complex context needs an appropriate decision
making mechanism. So, the aim of this study is to connect strategic, cost
and risk management perspectives, usually considered separately. In this
context the study puts in evidence, by a theoretic approach, these topics:
supply chain development needs an international standpoint in supplier
selection total cost of ownership approach is useful
to make clear the distinction between lowest price supplier and lowest
cost supplier and to compare different supplier costs activity based
costing gives more correct cost measures and focalizes activities costs,
so it measures the costs of the different activities required by different
suppliers in the context of an evidently wider decision support mechanism,
buyers may keep effective decisions about supplier selection and about
internal or external supplier choice using the activity based costing
approach integrated with the total cost of ownership perspective supplier
selection and exchange rate risk management are related, as this risk can
be managed using several approaches: diversification, financial hedging,
operating hedging. Specifically this last approach implies choices of
markets, plant location and pricing so that the selection of suppliers in
an international context can be at the same time a risk management choice.
Data for a set of Italian traded firms provides clear evidence about this
interconnection.