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Low Cost Country Sourcing

Digging Deeper Into The Present Day Scenario

· BestCountry Sourcing,Low cost,country sourcing

Standing in this present era of globalization and technological advancement, procurement leaders need to take a drastic step towards redefining their sourcing strategies based on certain parameters. These parameters are listed below:

  • Business value
  • Total ownership cost
  • Global dynamics

Apart from these parameters, scenarios like changing geo-political scenarios, natural calamities, volatile commodity prices, lack of legal infrastructure that meets safety standards, and rising consumer activism all have some sort of roles to play when it comes to strategizing the low-cost sourcing option being picked. Low cost sourcing option is presently not a static game anymore. Yes, low cost sourcing options are designed to meet with a certain amount of savings on the business investment process; but even then, sourcing managers need to consider the brand’s overall public perception closely.

Here are 2 major factors that contribute to low cost country sourcing:

Safety and Security of the Product

The safety and security of the product definitely have a strong impact on the overall sourcing cost. Take for example the toy manufacturing OEMs. They need to focus strongly on the quality control of their products to ensure the highest level of safety. This approach definitely leads to a higher manufacturing cost (along with quality management cost). There are companies those who have tried recovering these expenses through consumers (via the pricing) but have failed miserably due to economic downswing. This clearly indicates that low cost sourcing strategies not solely rely on cost savings. There are lot more things to focus, most notably creating a proper plan to have an impactful supply chain process. Additionally, a detailed analysis of the cost-benefit process needs to be carried out.

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The Effect of Geopolitical Situations

There is enough geo-political volatility in the present day world. The scenario has become tricky and at times, too intense to handle. A sourcing manager must be street smart in approach and focus steeply on the geo-political dynamics and its overall impact before developing a sourcing strategy. It is not only about identifying the best country sourcing options. What matters most is focusing on the geo-political situations in different countries. The supply chain can be affected severely if there happens to be some kind of geo-political issues taking place in countries being picked for low cost sourcing purpose.

Look at how countries like Hong Kong, Thailand, Africa, and Turkey has faced severe issues due to geo-political issues. Therefore, it is absolutely necessary to have a proper procurement team that would be handling the strategies and focus on the geo-political events affecting low cost country sourcing and affecting the overall supply chain.

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The present day scenario related to geo-political situations and unrest definitely paves the way to explore territories and horizons that have never been explored before. Such territories can be explored to understand the cost reduction situation and market accessibility scenarios. Best country sourcing options can be picked only when there lies a proper objective with timelines and milestones. Additionally, the commitment part from top management is equally important. Keep in mind, devising the low cost sourcing country based strategies is not a one-tie event. Procurement organizations need to keep evaluating their supplier pools to better manage the unforeseen events.