ABA 340: International Procurement Management
TOPIC 1: INTRODUCTION AND
OVERVIEW
, TOPIC 1: INTRODUCTION AND OVERVIEW
Definition of international procurement
International procurement is a term used to describe the process of allowing
firms around the world to bid on contracts for goods and services. The concept
has gained popularity as shipping and transportation costs have decreased due
to an influx of cheap, readily available fuel. The globalization of large
corporations has allowed them to reap the benefits of lower labor and materials
costs while still selling the same quality and quantity of products.
There are three primary benefits to international procurement: lower costs,
stimulation of a global economy, and increased consumer base. The lower
costs that can be achieved through purchasing services or goods from other
counties are derived from currency valuation and the effects of product
specialization. Both of which are core concepts in economics.
In international procurement, industrialized nations purchase goods from
countries with a lower dollar, gaining in the currency exchange. This rate varies
over time, but the multiplying factor remains fairly static. The ability to
purchase more with a dollar in another nation is one of the primary driving
factors behind the appeal of this type of procurement.
National vs. International Procurement
Whereas national procurement has local conditions to deal with, International
procurement consider below mentioned additional factors like
a) Currency fluctuations
b) Shipping lead time
c) Container packing (full container load or LCL )
Page 1 of 9
TOPIC 1: INTRODUCTION AND
OVERVIEW
, TOPIC 1: INTRODUCTION AND OVERVIEW
Definition of international procurement
International procurement is a term used to describe the process of allowing
firms around the world to bid on contracts for goods and services. The concept
has gained popularity as shipping and transportation costs have decreased due
to an influx of cheap, readily available fuel. The globalization of large
corporations has allowed them to reap the benefits of lower labor and materials
costs while still selling the same quality and quantity of products.
There are three primary benefits to international procurement: lower costs,
stimulation of a global economy, and increased consumer base. The lower
costs that can be achieved through purchasing services or goods from other
counties are derived from currency valuation and the effects of product
specialization. Both of which are core concepts in economics.
In international procurement, industrialized nations purchase goods from
countries with a lower dollar, gaining in the currency exchange. This rate varies
over time, but the multiplying factor remains fairly static. The ability to
purchase more with a dollar in another nation is one of the primary driving
factors behind the appeal of this type of procurement.
National vs. International Procurement
Whereas national procurement has local conditions to deal with, International
procurement consider below mentioned additional factors like
a) Currency fluctuations
b) Shipping lead time
c) Container packing (full container load or LCL )
Page 1 of 9
