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LCC Sourcing under Uncertainty of Economy

The escalated competitive pressures have set the expectations that companies need to continuously reduce their total costs, at the same time delivering faster and providing more diverse product portfolio. Low cost country sourcing has been adapted as an important sourcing strategy in different intensities by almost all industrial sectors.

Over the years, companies have enjoyed benefits of LCC sourcing, whereas at meantime companies are facing increased challenges to sustain LCC sourcing performances. Particularly with the recent changes in global economy climate, market demand starts to shrink, suppliers are struggling with increased financial difficulties, and governments are taking proactive stance in rescuing the economy. The question is: As purchasing executives deeply engaged in low cost country sourcing for the business, how do we look at these challenges and what do we see can be our opportunities?

In this background, a Purchasing Club meeting was organized on November 24, 2008 in Shanghai. Four sets of questions were raised under the title of “Low cost country sourcing under uncertainty of economy”; covering “emerging risks deserved for our special attention”, “impact on sourcing policy and guidance”, “power balance between buyers and suppliers”, and “critical success factors”. Purchasing executives from 15 businesses joined the 4 hours meeting and heated discussions. Companies were from different industrial sectors e.g. retailing, high-tech, electronics, consumer durables, manufacturing, software development, cosmetics, medical devices, and private equity.

Based on the discussions, an article was written by James Zhang, Ph.D., the regional director of Purspective in APAC.