Global Sourcing Spotlight: More Than Just Saving Money

Written by: Bob Duke on July 31, 2024

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Last year, I was talking with a potential customer about how I could help her business save money by getting a better value from one of my sources on products she needed to purchase. She was extremely skeptical and only agreed to talk to me because of one of my resourceful salespeople.

As we toured her facility, I saw several ways to help her company. She was not an easy sell, and as a true professional, she put me through the proverbial wringer. She tested me not only on why she should buy globally but also on why she should use my company. Eventually, we did business together.

Once I got back to the office and had the time to think about how things had gone, I decided that it would be helpful to write down what we had talked about.

She asked about sourcing savings, which is always the first question asked because it’s the number one concern. While I believe it’s an essential question, it’s not always the most important factor when going global.

Global sourcing is primarily driven by cost reduction. Different countries have varying cost structures because of differences in labor costs, raw material availability, and economic conditions. By sourcing from countries where production costs are lower, companies can achieve significant sourcing cost savings. For instance, producing electronic components in Southeast Asia may be more cost-effective because of lower labor costs and established manufacturing infrastructure. These sourcing cost reductions can then be passed on to customers or reinvested into the business for further growth. Yes, I can usually get a better price, but it’s not always about the best price.

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