Low Cost Country Sourcing Vital, but Pitfalls Remain

By Editorial Staff

Created:

As enterprises plan to double offshore-supplier spend, many are ill-prepared to succeed, AberdeenGroup reports


As enterprises plan to double offshore-supplier spend; many are ill-prepared to succeed, AberdeenGroup reports









  • Cost savings is the prime reason enterprises engage in LCCS. Total costs for goods purchased from low-cost countries are 10 percent to 35 percent lower, on average, than costs in the United States or Western Europe.


  • Enterprises source an average of 21 percent of their total spend from suppliers in low-cost countries, and they plan to increase that to 39 percent in three years.


  • LCCS comes with significant supply challenges and risks. Longer supply chains, trade regulations, tariffs, cultural issues, poorly developed infrastructures and immature suppliers remain high risk factors.


  • Most enterprises interested in LCCS have not developed well-thought-out strategies, and most are ill-equipped to undertake such an ambitious effort.


http://www.aberdeen.com/summary/report/benchmark/RA_LCCS_KF.asp

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