In analyzing its total cost of ownership, the company determined that utilizing regional suppliers on a global basis could gain greater savings in their overseas sourcing patterns. Adopting this strategy with one part family alone yielded savings of 26 percent.
Another Fortune 500 industrial company based in the Midwest found that it could dramatically reduce its TCO by shifting overseas supplier locations. Using the same supplier to minimize the start-up costs associated with a new supplier, and taking delivery from the supplier's manufacturing location in another country, the company enjoyed import duty and tax advantages that drove material costs down by 38 percent.
By taking the time to understand where your company is in terms of global sourcing and best practices, and then by charting where you'd like to be, particularly by moving to a TCO-based sourcing process, your company will have the opportunity to ensure global sourcing success.
About the Author: Frank Cirimele is an expert on global trade and the practical interpretations of global customs regulations for business application. He actively represents the U.S. on the United Nations International Trade Procedures working Group (UN/CEFACT ITPWG), which addresses Trade Facilitation, and e-business issues around the world. In addition, the U.S. Department of Commerce, International Trade Administration selected Frank to join the FTAA Committee on Electronic Commerce as a private sector expert.
At XPORTA, Frank is vice president of Global Supply Strategy and the architect of the methodology to collect, standardize and automate cross-border trade regulations, tariffs and rules to power the XPORTA Global Sourcing Solution.
For more information about global supply chains, please see the August/September 2004 issue of Supply & Demand Chain Executive magazine.