The Internet has made emerging markets sourcing easier than ever in the 21st century, allowing companies to research global markets, communicate with representatives, and source products to improve profit margins. Moreover, there is a wealth of opportunities for companies that can profitably serve the customers in these countries.
However, low-cost country sourcing is not always a smooth-sailing task. Global supply chains are inherently complex, requiring businessowners to learn about local expertise, rules, government, and currency constantly in flux. With its pros and cons, how can business owners ensure that their supply chains remain effective while minimizing the risks?
Continue reading as we take a look at some of the key capabilities of supply chain management that are crucial to ensure smooth operations in global sourcing.
Key capabilities of low-cost country sourcing
• Explore Local Expertise
Understanding the local business environment and the local culture is one of the most important steps in setting up global supply chains. As a business owner, it is crucial to ensure that you know how to identify the ideal supplier and communicate your exact requirements to maintain product superiority and gain a competitive advantage.
In addition, you also need to learn how to adjust your business operations in a new culture, handle the regulations, tax, duties, employment health and safety, etc. If you cannot delegate the task to one of your own, consider bringing on a consultant who can tread the waters for you.
• Strategic Planning
Planning for low-cost country sourcingaffects the entire organisation, meaning that organisational planning needs to involve all departments of the business, including operations and logistics, sales and marketing, and procurement and finance.
Extra steps must be taken to ensure that teams and decisions are not siloed, and transparency is maintained across all areas of the operations. Else, it is highly likely that the global supply chain is not delivering the promised bottom line, causing you to lose more resources than expected.
• Sales Predictions and Performance Tracking
Emerging markets sourcing is highly dependent on the use of technological advancements. From inventory management to supplier tracking, businessowners need to find technological solutions that will streamline the processes and minimise redundant administrative costs. For instance, accurate forecasting can help you avoid situations where you have too much or too little inventory to meet consumer demands, while also saving you additional costs in the form of taxes and duties.
Moreover, when dealing with suppliers in a different country, you need to emphasise strengthening all facets of the sourcing team. Tracking the performance and success of individual suppliers based on your requirements will help you cut down on delivery times and ensure product quality. You will be able to spot disruptive links early on and replace underperforming suppliers if needed.
Some other supply chain elements will become more important once supply chains diversify in emerging markets. Some of these include the role of local competition, intellectual property risks, and brand protection that organisations will need to research more once they set up effective emerging markets sourcing trends.