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The following article was published in our article directory on November 17, 2010.
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Optimal Cost Countries Procurement Three Development Trends

Article Category: Business

Author Name: Amanda xzh

These growing costs and changing circumstances to bring a new global sourcing challenges. Currently, many companies focus shifted from low-cost country sourcing "best cost" state procurement. To learn more about the current best practice global sourcing and the "optimal cost" to the development of national procurement, Boston Consulting Group surveyed a number of industries and countries from 30 multinational corporations. Studies have shown that the "optimal cost" of sourcing will continue to prevail down and show the following three major trends.

Broader scope of participation. "Optimal cost" includes not only the national leader in the procurement of the participants in multinational corporations and Fortune 500 companies, including small and medium enterprises in North America and Europe. Partly purchased from overseas suppliers has become much easier. Increase market transparency and help small business "best cost" countries have established direct purchase agreements. The main reason for enterprises to increase participation in low-cost country suppliers is becoming increasingly mature and become Western suppliers on the world stage a reliable replacement. In addition, the purchase of product categories from apparel and toys, and other traditional labor-intensive products expanded to technology and capital intensive products.

Supply base is more fragmented. All respondents said they would continue to maintain or increase in the "best cost" countries, procurement activities, especially in Asia, because in these countries can still save a lot of procurement costs. Although many of the participating companies said that the international financial crisis had a negative impact in some areas, but also for the "best cost" of sourcing and opportunities. For example, currency fluctuations, the relatively high cost to South Korea and other areas recently become a "best cost" supply base. Mexico and Vietnam, and other traditional low-cost countries due to exchange rate changes become even more attractive.

True global advantage. Respondents also said that the "optimal cost" countries, the benefits of the procurement is not just cost savings, but also through local and global competition and gain a strategic advantage. Many companies are purchasing the value chain other than the links, such as R & D and production, has shifted to the "best cost" countries, to further develop their design capabilities and production networks. These developments can create sustainable competitive advantage. The comprehensive use of the advantages of each region is the concept of "optimal cost" countries, the development direction of the procurement. By entering the local market opportunities to help businesses build relationships with relevant government departments and to show the entire value chain of innovation, "best cost" of sourcing can generate significant revenue and profit advantage.

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