With the rising demand for cost-effective and high-quality products, manufacturers globally are shifting to global sourcing. They aim to streamline the supply chains and improve the business bottom line.
Manufacturers adopted technology as product lifecycle management software to improve their processes. Similarly, adopting global sourcing strategies will allow them to acquire goods and services from international suppliers at a competitive rate and deliver products in a shorter time.
In this blog, let us learn how optimizing global sourcing strategies creates a competitive advantage for supply chain management companies.
What is global sourcing?
Global sourcing is the procurement strategy businesses use today to purchase goods or services from suppliers in different parts of the world at the best competitive prices. This strategy helps manufacturers to exploit global efficiencies in enhancing their product or service delivery.
Global sourcing can include economic factors like low-cost skilled labor, lower total cost, innovative technology, incentives like tax breaks, and more.
It improves different aspects of manufacturing, including supplier selection and performance, estimation of product cost, meeting trade compliance, speed to market, and auditing.
How do optimizing global sourcing strategies offer a competitive advantage?
Lower cost
Optimizing global sourcing strategies help manufacturers to identify new suppliers and gain a competitive advantage. The competition between suppliers ensures affordable supplies, allowing businesses to generate the best value for their money and save on excess expenses.
Additionally, you can access materials unavailable in your locality or expensive to produce.
Access to New markets and suppliers
Global sourcing allows you to take your business to the international market, meet new suppliers, and expand your consumer base resulting in increased sales. It is highly beneficial for companies operating in a competitive sector and looking for diversification.
Reduced risks
When you are sourcing products from different suppliers across the globe, your dependence on a single supplier reduces. It helps you mitigate the risk of supply chain disruptions.
Increased production capacity
Manufacturing sectors have received significant investments in several countries like China and India, which have increased their production capacity manifold.
By global sourcing, you can select destinations that have dedicated huge portions of their economy and investments in the manufacturing industry. It helps you increase the production capacity smoothly and is helpful when consumer demand rises steeply.
Access to a skilled workforce
Every manufacturer wants skilled professionals in their company to stay free from unnecessary headaches. The workforce in some countries is better than others. They are aware of the trends in production techniques and can implement advanced manufacturing techniques.
Global sourcing of the workforce allows you to manufacture products that meet international quality standards. Additionally, you can gain access to high standards staffing at low costs in certain countries.
Advantage of reciprocal service
Global sourcing can be conducted on mutual agreement terms where the seller of a service can be a purchaser of another service. For example, a local company’s maintenance department can assist an international company, and in return, they can help with their administrative department services. It opens up your chances of getting access to better opportunities at affordable prices.
Improved product or service quality
To survive the growing competition in the market, manufacturers need to give an extra eye to product quality. While most have adopted supply chain management software to improve the supply chain process, improving the quality of goods and services is essential.
When you are sourcing raw materials or finished products from countries with advanced manufacturing capabilities, you can generate higher-quality products for your consumers that may not be available domestically. It gives you an additional advantage to stand out from the competition.
A competitive edge
By sourcing high-quality, low-cost products from global markets, manufacturers can reduce the overall cost of producing a complete product. It helps you offer high-quality products to consumers at an affordable price than your competitors, resulting in increased market share and revenue growth.
Additionally, you can introduce a new product in the market that your local competitors still need to produce. This creates a buzz in the market allowing you to stand out from local competition. Major companies like Alibaba and Skype have used global sourcing to gain a competitive advantage and market dominance.
Final thoughts!
There are several reasons why businesses are considering global sourcing today, and one notable reason is to survive the competition by offering high-quality, low-cost products and gaining market dominance. Most of the reasons are connected with the objective of making your business feasible and efficient while generating good profit. Global sourcing not only builds successful businesses but helps them sustain themselves in the market.
