Traditionally, sourcing products was directed towards achieving one goal, cost-efficiency. The concept of strategic sourcing has added more dimensions to this one-track approach. The purview of traditional sourcing has been extended to achieving competitive advantage, building long-term relationships, and expanding horizons.
Strategic sourcing is all about leveraging the market intelligence through sound research, sourcing quality products and delivering in a timely manner after performing quality checks. Third party companies are at the core of this service.
By relying on a third party for sourcing, a company can focus on its core competency without worrying about the periphery. Over the years, there has been a shift in the company’s approach towards this critical aspect of business.
Traditionally, companies preferred vertical integration. Now the onus has shifted from owning assets to skills. Ideation is the key. However, sound execution is required to bring the idea into existence. Organizations earlier preferred backward and forward integration but now they are looking at experts like UPS and FedEx to manage their warehousing and logistics.
The model of outsourcing has given way to strategic sourcing wherein an organization relies on a company to source material and products to cater to its manufacturing ambitions and increase its value.
By partnering with a specialist sourcing organization that provides dedicated sourcing services, companies also get the currency advantage to reduce the manufacturing cost, derive better margins and increase the value proposition. These specialist companies are SMEs (Subject Matter Experts) that cater to SMEs (Small and Medium Enterprises).
It is estimated that there are more than 1.9 billion of SMEs (Small and Medium Enterprises) globally, which represent 99% of global business. Engineering and technology services are expected to reach US$660 billion in 2020. The digitization era has made it easy for start-ups to enter the market and prosper.
As small and medium enterprises are mainly comprised of subject matter experts in a particular field, they are on the lookout for subject matter experts in other domains. They collaborate with these subject matter experts via strategic sourcing to increase their productivity by gaining the competitive advantage.
One of the strategic advantages a company can gain is the availability and accessibility of cutting-edge technology. China is considered as the ‘World’s Factory’ when it comes to manufacturing products. Many attribute this to low wage rate. However, that is just one factor that offers China leverage over other countries.
Although, they are losing an edge in terms of low wage rates, they are miles ahead in terms of technology leadership, lucrative business system, ease of business, talent pool and minimal compliance.
When global companies apply strategic sourcing strategy in China, they derive manifold benefits. Achieving cost-efficiency is a vital benefit, but it is not the only one. By partnering with sourcing companies in China, companies get the advantage of having a local technology team in a foreign land. This leads to better market intelligence, research-oriented decisions, improved communication and long-term relationships – leading to better productivity.
Headquartered in Hong Kong, we possess a geographical advantage in linking the East and the West. We have been at the core of the strategic sourcing activity for more than a decade. By partnering with us, organizations have reduced their costs, streamlined their functioning across levels and enhanced the quality of their end products. Our network of specialists allows us to match your demand with adequate supply.
Be it product development or consultancy, our team of experts works closely with you to help you get the most to research, source, deliver and enhance your productivity. To know more about our services, click here.