Over the past ten years, companies have developed their global and remote sourcing strategies, based on their hindsight and experience. Total cost models and stock constraints have led to approaches and priorities being adapted to each country.
Context and challenges
Global Sourcing refers to a company's strategic decision to address the global supplier market to procure and supply its products and services. This decision is generally motivated by the availability of "low-cost" skills or commodities. However, Global Sourcing also provides a means for companies to develop their business in new locations, to motivate historic suppliers, and to improve their industrial capacity.
In recent years, we have increasingly seen our clients source their manufactured products from China, relocate their call centers to North Africa (French companies) or India and the Philippines (English-speaking companies), and procure their IT services in India or Eastern Europe. We have seen these areas change faster than ever. For example, the Textile market is moving out of Eastern China towards Western China or to Bangladesh and Vietnam.
According to our clients’ feedback, implementing a Global Sourcing approach also poses risks, which need to be anticipated and included in the business case:
- Difficulties controlling the quality of products
- Overstock, stock-outs and/or increased obsolescence costs
- Hidden cultural costs or costs related to managing new time zones
- Exposure to financial and political risks
- Loss of intellectual property
- Extended transport cycles and saturation of ports, increasing risks of delay.
To limit these risks, some of our clients went so far as to create dedicated procurement organizations, referred to as International Procurement Organizations (IPO), in their new locations. IPOs are responsible for identifying and developing new suppliers and managing day-to-day requirements and interactions between the supplier and the "parent" procurement organization. For large, complex markets, such as China, the IPOs of large manufacturing groups have taken on an essential role.
Argon Consulting has created, along with its partners, a global network of 200 experienced consultants and buyers, who are able to support the Global Sourcing strategy of Argon’s clients. We are present in:
- China (Shanghai, Hong Kong)
- Vietnam (Ho Chi Min City)
- India (Mumbai)
Thanks to its partners, who are located in different low-cost sourcing areas, Argon Consulting is uniquely positioned to help its clients define and manage their Global Sourcing strategy.
How can Argon Consulting help you?
- Defining the best location for the procurement of products (or services), based on the comparative advantages of each market and the client's constraints
- Identifying potential suppliers in the countries selected
- Performing quality and sustainable development audits to qualify suppliers
- Drafting procedures to ensure supplier quality
- Defining the most effective Supply Chain model (logistics network, transportation, customs, stock management) to ensure that any benefits created by lower "starting" prices are not lost.