Taking your Business to the Next Level

To curb rising production costs and to boost global competitiveness, many companies are turning to global sourcing as part of their production to overseas countries. For example, you’ve discovered a company in Indonesia that can produce your widget for one-fourth the cost. Now what? How do you know if global sourcing is a good fit for your business? The 20 questions below will help you determine if global sourcing is a viable option for your business. You don’t need to answer all of the questions, but you should keep most of them in mind as you look to outsource across borders. Your responses to the questions can be used to assess your business’s readiness for outsourcing and to help you craft a thorough global sourcing strategy that can be implemented now or in the future.

  1. What is the key driver that is compelling you to consider outsourcing?
  2. Do you want to lower production or other costs related to outsourcing?
  3. Will outsourcing make your business more efficient? If so, how?
  4. Will outsourcing exploit a competitive advantage on either of the following?a. Marketing, R&D or manufacturing?b. Labor costs, taxes or transportation?
  5. Is it in your best interests to diversify and form a dynamic value chain?
  6. Have you lost focus on your core business competencies that led to the current success you have achieved with your core business?
  7. Do you have a worldview?
  8. In other words, do you have a desire to sustain a competitive edge on a worldwide basis and not just locally?
  9. Can you tolerate a certain degree of risk on the manufacturing activities or business processes taking place in a foreign country?
  10. Is being nimble and fast-to-market important to you?
  11. Do you desire to be strategically responsive-proactive-to the market in adapting your products to meet the needs of customers worldwide?
  12. Is it your goal to outsource components or finished products from foreign suppliers?
  13. Are you under competitive pressure or threat to do something radically different with your supply chain in order to remain profitable or to stay afloat?
  14. How knowledgeable are you on trade regulations? Do you have someone who can translate or have a translation agency to utilize?
  15. Are you good with communicating-often at long distances-with your employees, customers and suppliers?
  16. Are you eager to put your brand name on a foreign-made product and see it as if it were your own? (Are there any consequences that come with that decision, e.g., backlash on not Made In America products)?
  17. Have you performed a SWOT (strength, weakness, opportunity and threat) analysis on a specific overseas market for outsourcing a finished product, component part or business process?
  18. Do you have an international logistics expert who can guide you on transporting the component parts or finished goods once you line up a supplier?
  19. Do you have a reputable international lawyer on hand to guide you through all possible legal issues related to your outsourcing initiative?
  20. Do you have the human capacity to support sourcing globally, from an individual working with the supplier (including trips overseas to monitor the facility and quality) to a logistics manager overseeing timely deliveries and a finance expert who can track, measure and monitor the financial bottom-line impact on your company?

Global sourcing can help your business improve the delivery of its products or services, achieve cost savings, gain efficiencies, and develop and sustain a long-term competitive advantage in the world marketplace. What it can’t do is innovate; that is still up to you. By outsourcing redundant processes and functions globally you should have more free time to enhance your capacity to innovate.

About the Author
Rachel Brenner is a Professor of Jewish Studies. Her research focuses on Jewish Literature and has published dozens of scholarly articles and book chapters.
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