While global sourcing, the practice of procuring goods and services from suppliers located in different countries, offers a range of benefits for businesses, it also presents several potential problems that businesses must consider. Below cases illustrates the key potential problems of global sourcing EXCEPT:

A company, ABC Corp, has recently entered into a contract with a supplier, XYZ Ltd., based in Mexico, to procure a specialized component for their products. However, due to longer lead-times for shipping and customs clearance, the company is now facing an increase in pipeline inventory, which is putting a strain on their working capital. ABC Corp is now exploring the possibility of renegotiating the contract terms with XYZ Ltd to reduce the lead-time or finding alternative suppliers that can offer shorter lead-times.

A company, XYZ Inc., based in the United States, has entered into a contract with a supplier, ABC Ltd., based in China, to procure goods. However, the value of the Chinese currency has fluctuated significantly, resulting in an increase in the cost of the goods for XYZ Inc. This has put a strain on their supply chain budget, and they are now exploring the possibility of finding alternative suppliers in other countries to mitigate the currency risk.

A company, PQR Inc., based in Australia, has been working with a supplier, MNO Ltd., based in Vietnam, to procure goods for several years. The two parties have established a strong relationship built on trust and collaboration, and they have been able to identify several cost-saving opportunities in the supply chain. The cost savings achieved have been significant, and both parties have agreed to share the savings in a mutually beneficial way.

A company, DEF Inc., based in the United States, has recently entered into a contract with a supplier, MNO Ltd., based in Bangladesh, to procure goods. However, DEF Inc. has received reports that MNO Ltd. may be violating ethical standards, such as labor laws and human rights. DEF Inc. is now facing the challenge of balancing their business objectives with their ethical responsibilities. They are considering conducting an audit of MNO Ltd. to investigate the allegations or finding alternative suppliers that have a better ethical track record.