As the rate of globalization is increasing at an accelerated pace, businesses worldwide are looking for ways to minimize their cost of production to improve their profit margin. Sourcing is a wonderful way to achieve this objective. Asia is a vast market that provides cheap yet highly skilled labor that can significantly reduce the procurement cost of a business, thereby improving the ROI.
Despite the lack of accurate data on sourcing in Asia, Grandview Research estimates that the outsourcing market will be worth approximately $ 261.9 billion in 2022. This size is likely to increase further, and we will likely see a compound growth of nearly 9.3% annually from 2022 to 2030.
This blog post will discuss the best justifications for sourcing goods from Asia, from cost savings and access to skilled labor to quality control and reasonable shipping times.
- Asia offers cheaper labor costs
The first advantage that jumps to mind when we try to justify sourcing from Asia is the significantly lower labor costs in Asian countries. The price to hire workers in countries such as India, China, and Vietnam is substantially lower than that of other countries, making it attractive for businesses to utilize these sources of labor.
2. Specialty materials are readily available there
In addition to cheaper materials, Asia is well stocked with a wide range of specialized materials that have broad applications across industries. These specialized materials include specialized plastics and rare earth materials, making Asia a cost-effective manufacturing destination for big multinationals.
3. The turnaround times are much faster
Another vital advantage that favors sourcing in Asia is the fast turnaround time. This quicker turnaround time happens due to many factors, including shorter supply chains, scaled-up production, and high-quality logistical infrastructure. Companies can leverage these factors to deliver their goods faster to their customers.
4. Established global supply chain
Asia also has an established supply chain of several multinationals and global manufacturers for a range of goods, which can vary from raw materials to finished products. The existing supply chain makes it easier for big businesses to source goods quickly, efficiently, and cheaply from Asia. Additionally, since Asia is already plugged into significant supply chains, manufacturers here have the experience and skill required to customize their productions to meet the specific needs of their customers.
5. Access to modern technologies and innovations
Over the years, Asia has become a global leader in using the latest technologies to improve their output and make their production process more efficient. Almost all high-end products, like robots, smartphones, semiconductors, and others, are manufactured at scale. As a result, any company looking to procure goods for their business will find sourcing from Asia to be a profitable option.
Conclusion
For businesses, purchasing from Asia may be a prudent decision. Asian countries have a diverse range of items and materials. They also allow firms to enhance their bottom line due to lower labor and production costs. They also have well-established transportation networks and infrastructure, which reduces costs and ensures timely product delivery.