Low Cost Country Sourcing
Low Cost Country Sourcing – Realize Significant Savings
Low cost country sourcing has grown significantly, especially in the current economic scenario of intense competition and spiraling raw material costs in the manufacturing sector. Great value can be realized from a strategic plan to source products and services from these countries by using global sourcing services. Countries which offer a low cost environment and are considered to be ideal for sourcing opportunities are China, South East Asia (especially Vietnam and Thailand) India, Brazil and Turkey. Implementing programs in these economically emerging regions has helped companies across the world grow their revenues.
End-to-end Business Solutions
As you try to find, sustain and continuously deliver long-term value in your business, what you require most is an end-to-end process, which incorporates low cost sourcing of products, supplier selection and contracting, shipping, storage and delivery to various locations. Throughout the process, it is crucial to maintain quality standards.
What You Need for LCC Sourcing
- Latest market information
- Management of supplier relationships
- Global supply chain analysis
- Contract management
- Procurement Operations management
It is crucial to find a company that can take on these tasks for you. The company should have experience in this field and over the years have developed relationships with the best manufacturers and suppliers in low cost countries. Here’s how a procurement company can help you:
- Adopt a strategic vision and approach – they can build a structured and credible program with clear objectives and deploy human and financial resources to achieve them
- Beat “buying” competition in low cost countries – Help you access the most cost competitive supply base for low cost sourcing.
- Sell your sourcing program – You will be the priority customer for your suppliers
- Deploy dedicated export buyers – They remain focused on sourcing exclusively for the export market and are not buyers for the local market
Overcoming internal barriers and building credibility for the programme both within the organization and the supply markets requires demonstrating success stories as rapidly as possible. Companies need to identify priority categories in their spend portfolio and key category selection criteria can include total value of the spend in the category, the category’s cost structure and incremental logistics cost. On the risks and speed of implementation front, the criteria are manufacturing complexity, criticality of the product in the end application, need for short lead times and high responsiveness and the potential reaction of the incumbent suppliers.
Low Cost Sourcing Countries – Assured Market Growth in Emerging Nations
Although cost-savings remains the top reason for western countries to focus on emerging markets and LCC sourcing, the other reason is the competitive edge, which these companies can enjoy. They can successfully carve substantial markets for themselves by offering the products in the local markets as well.
Benefits Offset By Risks?
While the advantages of low cost sourcing might entice worldwide companies, only experienced procurement professionals can warn you about potential pitfalls and the obstacles that might prevent you from achieving the desired benefits. Apart from the hunt for capable suppliers, a number of cultural and political differences might keep you away from establishing contacts in the country you choose. Language remains a major issue and is accompanied by the problems related to norms, standards and specifications which you want to convey to the supplier. Labor quality, business license limitations, project management challenges and technical capabilities in the supply base also play an important role in determining LCC sourcing success. Although legislations in most of these countries are evolving rapidly to protect copyrights and patents, you will need to be warned about IP risks when you are choosing vendors in any of these nations.
Enhance Your Market Position
You can find help to form key relationships with vendors in the low cost country sourcing region you choose and help you derive maximum benefits from low cost manufacturing. This will ensure that you remain a business partner and not just a buyer. Strategic sourcing experiences will help you with a quick route to business success.