Here are tips on Offshoring and Global Sourcing from one of our Senior Consultants, Jonathan Zhang.
“I’m Jonathan Zhang, a Senior Consultant of the Logistics Bureau.
Nobody could ignore the role that global sourcing placed in today’s procurement world. Despite the global economic slowdown, a huge cost gap between the developed countries and low-cost countries, we ensure continuous growth in sourcing from regions, such as China, Mexico, Southeast Asia and Eastern Europe. Whether you look at a local manufacturer, wholesaler or retailer, I am sure that you would agree with me that managing efficient global sourcing network and process can be serious challenge. It can have a huge impact on the total value that you are delivering to shareholders. Today, we are going to have a look at the 2 business cases:
Just imagine your companies currently manufacturing consumer durable products locally and facing severe competition from cheap imports. You might want to get yourself immunised by sourcing offshore directly so you can maintain a relatively low product cost. Be prepared! It’s not only about getting the product imported from low cost countries, it’s all about managing your total cost of supply chain right from suppliers til DCs and at your customers.
We would remind you that the longer your total supply chain is, the more prepared you need to be to face the cultural, organisational and operational challenges.
Here are just some of the key questions we should ask ourselves:
– What is your organisation’s long term business strategy?
– What is the broad commercial and supply chain implication of shutting down local operations and starting up your offshore sourcing or offshore manufacturing?
– Is your demand flow mechanism robust enough?
– Does your planning and purchasing team have the experience required to manage overseas supply base?
– Do we have a competent support team on the ground to resolve supply issues?
– Is your functional purchasing closely aligned with your strategic procurement objectives?
– Have you established the clear business process to ensure effective coordination across demand planning, purchasing, engineering, global inventory management and international logistics, just to name a few?
Let’s have a look at Case 2:
Let say you are a sizeable whole-seller in the local market and you’ve been sourcing with your agency network for quite a while. Now the board of your company have decided to embark on direct sourcing to make your cost of goods sold much lower to increase the share of your probable business.
– Is your company ready to control the direct sourcing from the origin?
– What are the challenges in managing an overseas sourcing centre?
– What impact would extra 30 days plus lead time gives you total supply chain in terms of customer service and your inventory holding at a various stocking points?
– How do you design a regional or global sourcing network that struck the right balance between supply chain cost and a supply chain reliability.
– How do you manage supply chain collaboration across a wider geographical and time span?
At Logistics Bureau, we help our customers to form a holistic view of an end to end supply chain, diagnose the key issues within it, per our task key and improvement initiatives, then provide a specialist device to a procurement function and help you to determine how much extra value you could possibly derive from the inbound supply chain.
Our procurement consulting service will help you to determine you strategic, operational and a cultural remedies for offshore sourcing or offshore manufacturing and help you to operationalise your global procurement strategy in a practical way.”