Who's best at moving to low-cost sourcing?

Staff -- Purchasing, 2/3/2005

AMR Research recently highlighted two companies that have made the move to low-cost country sourcing more smoothly than many others. Retail giant Best Buy was dealing with offices in China with business slowing because of the 13-hour time difference and employed a web-based supplier management system to streamline the work. United Technologies Corp. was also highlighted for its work in replacing its European motor parts suppliers with local Russian suppliers that were not properly trained in Western sourcing methods.

AMR puts suppliers into three categories as follows:

• High. Highly developed, often large and international, these suppliers have strong manufacturing processes and communication abilities, but savings are the lowest.
• Medium. These companies tend to be nationally based within China and can offer better savings, but risks are higher because their infrastructure is not as mature.
• Low. The least developed companies offer the highest savings, but they tend to be locally run and lack good communication skills. They are the most illiterate in Western culture and sourcing styles.