Executive Briefings

Tossing Out a Low-Cost Sourcing Strategy in Favor of 'Best-Sourcing' Practice

Years ago, supply management professionals turned to low-cost countries to manufacture products, establish services operations and source materials in an effort to improve the bottom line for their companies. They found that inexpensive labor in India, China and emerging Asian countries made this new low-cost-country strategy successful "” despite requiring the management of lengthy, complex supply chains. Then the world began to change.

Energy prices skyrocketed, risks from unforeseen natural disasters and political upheavals soared, and intellectual property protection posed greater challenges than first thought. Suddenly the quest for cheap labor was not always translating into cost savings.

Supply management professionals agree that a low-cost-country sourcing strategy has lost some of its luster. While low labor costs and prices will always be part of a sourcing strategy, they no longer are the centerpiece. Today's best-practice supply management leaders are developing sourcing strategies built on a foundation of value creation, total cost of ownership, landed cost analysis and risk management. Many call it a best-sourcing strategy.

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Keywords: sourcing solutions, supply chain management, value chain, supply chain solutions, procurement strategies, sourcing initiatives

Energy prices skyrocketed, risks from unforeseen natural disasters and political upheavals soared, and intellectual property protection posed greater challenges than first thought. Suddenly the quest for cheap labor was not always translating into cost savings.

Supply management professionals agree that a low-cost-country sourcing strategy has lost some of its luster. While low labor costs and prices will always be part of a sourcing strategy, they no longer are the centerpiece. Today's best-practice supply management leaders are developing sourcing strategies built on a foundation of value creation, total cost of ownership, landed cost analysis and risk management. Many call it a best-sourcing strategy.

Read Full Article


Keywords: sourcing solutions, supply chain management, value chain, supply chain solutions, procurement strategies, sourcing initiatives