Business compulsions have necessitated companies to change their procurement strategies from local markets to global suppliers. Low cost country sourcing is a process where you can procure raw materials and products from an emerging country. Countries like India, Russia, Brazil, Malaysia, Thailand, etc. are some of the low cost suppliers.
Immediate benefits:
• High-quality products as the manufacturers look for long-term relationships
• Lower price structure than in the local markets.
• Outsourcing will cut your overheads.
• Opportunity to grow in new markets.
However, low cost country sourcing is not without its share of challenges. You will be entering unknown regions. Your efforts may go haywire if you are not well-prepared. You, otherwise, may face a few challenges like
Language barrier: Not every third world country is English speaking. Communication will be a big problem.
Local tariffs: Understanding the export taxation policies in these countries will need some expertise.
Logistics: Since these countries are still in the developing stage, the transportation system is poor. There could be delays, cancellations and other similar issues.
Suppliers: Searching for reliable suppliers, signing up contracts will take time and considerable resources.
Risks: The local political and economic conditions, poor quality products, supplier inability to meet deadlines, etc. can cause huge losses to you.
Partnering with a procurement consultant will save you time, money and resources.
Immediate benefits:
• High-quality products as the manufacturers look for long-term relationships
• Lower price structure than in the local markets.
• Outsourcing will cut your overheads.
• Opportunity to grow in new markets.
However, low cost country sourcing is not without its share of challenges. You will be entering unknown regions. Your efforts may go haywire if you are not well-prepared. You, otherwise, may face a few challenges like
Language barrier: Not every third world country is English speaking. Communication will be a big problem.
Local tariffs: Understanding the export taxation policies in these countries will need some expertise.
Logistics: Since these countries are still in the developing stage, the transportation system is poor. There could be delays, cancellations and other similar issues.
Suppliers: Searching for reliable suppliers, signing up contracts will take time and considerable resources.
Risks: The local political and economic conditions, poor quality products, supplier inability to meet deadlines, etc. can cause huge losses to you.
Partnering with a procurement consultant will save you time, money and resources.
0 comments:
Post a Comment