Date:18/06/2008 URL: http://www.thehindubusinessline.com/2008/06/18/stories/2008061852081000.htm

Back ‘India destination No 2 for global sourcing’

Our Bureau

New Delhi, June 17

China, followed by India will be a top destination for sourcing for the retail and the consumer sectors in the coming years. While cost is still the key driver of global sourcing activities, mature companies are shifting focus to gain greater efficiency in the competitive market, with focus on better quality products and collaborative supplier relationships, according to a PricewaterhouseCoopers survey.

The survey titled ‘Global Sourcing: Shifting Strategies’ showed that China is still the number one destination for global sourcing for 83 per cent of respondents.

India followed with 58 per cent. Mexico, Brazil, Malaysia, Canada, Chile, Italy and Bangladesh were also cited.

Mr N.V. Sivakumar, India retail and consumer leader, PricewaterhouseCoopers India said, “Global sourcing is experiencing robust growth with increased globalisation. For success, companies need to adapt their organisational structure and processes to manage the supply chain risks, minimise impact on environment, as well as measure and maximise cost savings.”

Thriving practice

The report also noted that the practice of global sourcing in the retail and consumer sector is thriving, but many companies are not particularly clear on their cost savings or confident of product safety and other key risks.

The report said that cost is the primary driver of global sourcing decisions, yet 21 per cent of respondents do not know what savings to expect.

The survey of nearly 60 retail and consumer goods’ companies found that one-quarter of respondents did not know what their actual savings were.

Companies from Australia, Canada, China, France, Germany, India, the UK and the US took part in the survey, 44 per cent of whom source more than $500 million of product globally each year and 27 per cent source more than $1 billion globally.

Among survey respondents the more common costs measured were the ones that are easier to track — transportation and logistics, customs and warehousing.

The survey also picked up that product quality is the single greatest risk to global sourcing, cited by 68 per cent of the survey sample.

However, less than half said they were confident of managing the risks associated with product safety, despite the potentially damaging repercussions of a product failure or product recall.