Numerous research articles and industry reports are currently available that deal with global sourcing, however, few articles and reports can be specifically found on sourcing packaging materials in the consumer packaged food (CPF) industry. The purpose of this paper is to understand and develop the supplier selection process and overall cost modeling that facilitates the selection of a high‐quality global supplier for low‐cost packaging materials used in large quantities for CPF products.
To gain information relating to packaging material sourcing, a comprehensive literature search was conducted. Additionally, interviews with packaging material sourcing managers and directors were performed at a major global CPF products manufacturer. Knowledge gained from literature, industry interviews and available business data was used to develop a generic strategic outsourcing model and a closed loop business framework for selection of global suppliers of packaging material. This framework utilizes the proposed total cost of ownership model for global sourcing and weighted qualitative criteria matrix demonstrating how it is used in global supplier selection.
The results of this study show a standardized supplier selection process and the total cost of ownership model for a CPF manufacturer which incorporates the different logistic costs such as tariffs, duties, inventory carrying levels and cost of quality. These two models are then merged into a selection matrix to determine with which supplier to enter into a long‐term supply relationship.
The paper combines both the relevant closed loop supplier selection modeling framework and the total cost of ownership model in the selection of supplier for low‐cost high‐volume CPF materials. It adds rigor regarding cost of ownership and emphasizes the need for a strategic rationale when entering into long‐term global supply relationships between CPF products manufacturers and packaging material suppliers.
