The Inovis Blog

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Sourcing goods and materials overseas is nothing new, and companies continue to recognize significant benefits through global sourcing. In fact, a recent post by David Morgenstern on supplyexcellence.com highlighted some interesting statistics around low cost country sourcing (LCCS). The most interesting figure that caught my eye was that best in class companies are spending about 40% of their direct materials dollars through low cost countries and, in doing so, are recognizing an average cost savings around 20%.

So global sourcing is a no-brainer, right? Well, yes, IF you can effectively manage the additional complexities that come with doing business in low cost countries – complexities such as extended supply chain cycles and partners that are not accustomed to following standards that you expect from your standard suppliers.

The good news is that technological tools exist that can help you clear these hurdles with limited effort. I would recommend two such tools if you are looking to start a global sourcing project, or if you are just looking to improve your existing operation.

• Supply Chain Visibility – supply chain visibility tools of today can give you unprecedented visibility into the global flow of your merchandise. Many global/low cost country suppliers have quality problems that extend beyond the product itself to the activities that surround the product’s order, fulfillment, and shipment processes. Getting the right merchandise, at the right quantities, on the right truck, train, ship, and/or airplane, at the right time can be a challenge with your best domestic suppliers. It becomes exponentially more challenging with global sourcing. Visibility tools allow you to monitor your data flow and recognize problems or, better yet, potential problems before they impact the business. You become armed with the tools necessary to prevent the problems altogether.

• Partner Certification – as mentioned previously, many global partners are not accustomed to the rigid requirements that you might have for your supplier community. Failing to certify that your global partners can indeed meet your expectations will almost certainly result in a rude (and costly) awakening. The best approach is to leverage a partner certification tool to enable your global partners to test their capabilities against your expectations. And the coolest thing about partner certification solutions today is that they are 1) self-service enabled, which means that you do not have to hand-hold each partner through the process, and 2) remediation ready, meaning when problems or gaps in the partner’s capabilities are recognized, the solution will automagically walk the partner through the necessary steps for improvement, again without you having to become involved.

So if you are serious about global sourcing, make sure you consider supply chain visibility and partner certification solutions that can help position your company for success in this initiative.