Low Cost Country Sourcing
04 May. 2011 General
Imagine a situation where you are buying say 10 kg sugar @ Rs. 50/Kg from the grocer next door. You end up spending Rs. 500 on the same. Now, there’s a new hypermarket in town, about 3 kms away from your home and is selling sugar with same quality if not better at Rs. 45/Kg, for 10 kgs, you incur Rs. 450. You will quickly calculate and quantify: A. Amount of expense on fuel, B. Cost of carrying sugar across a distance of 3 Kms, C. Amount of effort you will incur in the activity. If the sum of these 3 is less than Rs. 50, you will obviously go and buy the sugar from hypermarket. This is the essence of Low Cost Country Sourcing (Hereafter referred as LCC Sourcing).
In the example above, the two crucial facts though were, A. Availability of the ‘Information’ that there’s such a hypermarket in town selling sugar at Low Cost. B. Your calculations and Willingness to save that extra penny. Here comes the role of how aptly the ‘NEW’ source has orchestrated his or her offering and the avenues it has for expanding it horizon. Also, it depends on the ‘Trustworthiness’ of the new source. You may buy the sugar from Hypermarket, but if it’s just another grocer, 3 Kms away, giving huge discounts, you will definitely find it dicey and stick to your old source.
The current global competitive scenario is dominated by improved communication technologies and opening of global economies. These factors have paved the way for introduction of new players in traditionally insulated markets across industries. These new entrants with improved business and operational methodologies are exerting immense pressure on companies across the globe to cope up with the dynamics of modern day operations. New equations on the diplomatic levels, realignment of relations between economies, emergence of developing countries as regional hubs of trade and commerce are increasingly adding new dimensions to business processes.
The LCC Sourcing is prudent concept gathering momentum in the industry circles due to this realignment of economies across the globe. In such a dynamic scenario, the winning formula lies in the hands of the companies who are most flexible and open for changes. The kinetics of adopting new entrants in the company’s ecosystem assumes topmost priority. One very important species in any organization’s ecosystem is its suppliers. LCC Sourcing is a smart way of sourcing items not only at the lowest cost but also (at times) at better quality. The manufacturing, resource, technological and other benefits give some countries unassailable lead over the others in terms of producing items better… faster and cheaper than other countries.
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