Strategies for Purchasing in Asia
No effective procurement strategy is complete without a well-developed international component. There are seven approaches to international procurement:
- Purchasing from a vendor's agent in the U.S.
- Purchasing directly from the vendors in Asia.
- Purchasing through an agent or contract IPO in Asia.
- Establish your own IPO in Asia.
- Subcontract out both manufacturing and purchasing.
- Establish a manufacturing plant with local purchasing.
- Establish a joint venture or strategic alliance.
All strategies vary in the exposure to "overall risk/overall return on your investment" quotients. Far East Resources allows you to outsource both engineering (manufacturing) and administrative (purchasing) functions without the need for investment in infrastructure or exposure to risk that tend to be the norm in direct-international relationships.
Global sourcing is critical to the success of many companies in the electronics industry. Together with marketing, technology and control, it is a key factor to achieving global competitiveness. Marketing and technology develop the right product; sourcing and manufacturing provide it at the right price; and control delivers it to market on time.
If a company does not have a global sourcing strategy and its competitors do, or if it is a faulty strategy, this could spell disaster. But with a properly defined and controlled approach, the potential for achieving global competitiveness is enormous.