Wolverine World Wide, Inc.

Wolverine World Wide, Inc.

Value Chain Activities

The approaches Wolverine followed to configure and coordinate its value-chain activities worldwide include global sourcing, outsourcing, business process outsourcing, offshoring and contract manufacturing. Global sourcing refers to the procurement of products or services from suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third country. Outsourcing is the procurement of selected value-adding activities, including production of intermediate goods or finished products, from external independent suppliers. Business process outsourcing refers to the outsourcing of business functions such as finance, accounting and human resources. Procurement can be from either independent suppliers or via company-owned subsidiaries or affiliates. Offshoring refers to the relocation of a business process or entire manufacturing facility to a foreign country. Managers make two strategic decisions regarding value adding activities: whether to make or buy inputs and where to locate value adding activity, that is the geographic configuration of a value adding activity. Contract manufacturing is an arrangement in which the focal firm contracts with an independent supplier to have the supplier manufacture products according to well-defined specifications.

Global Sourcing Growth: Key Drivers

Three key drivers are especially responsible for the growth of global sourcing in recent years. These drivers include technological advances in communications, especially the internet international telephony. Access to vast online information mean focal firms can quickly find suppliers that meet specific needs, anywhere in the world. Firms like Wolverine and others involved in the global footwear industry can communicate continuously with foreign suppliers at a very low cost.

Falling costs of international business is another key driver of the growth of global sourcing. Tariffs and other trade...