With manufacturing costs continuing to rise and ethical concerns around labour practices at an all-time high, it’s no surprise that so many companies are looking to global sourcing as a way to reduce their expenses while still maintaining quality standards. But there are so many different facets to consider when entering into this new arena, which makes it difficult to know where to start or what exactly to do. In this guide on how to develop a global sourcing strategy, we’ll walk you through the 7 stages of developing your global sourcing strategy from beginning to end.
1) Identify the Challenges
Challenges are what make projects interesting. Let’s face it, you didn’t choose to build your global sourcing strategy on easy street. The world is brimming with complexities, but if you identify them early on, you’ll have more time to strategize how best to address them. Remember that challenges should be specific and measurable—e.g., time to market is faster, not increase our profits by 5%. Avoid broad statements like make sure everything goes well. If things go wrong, they should go wrong because you made mistakes or took risks—not because you set out making things go right for no reason other than wanting things to be right.
2) Gather Data
Data and information play vital roles in any global sourcing strategy. Of course, there’s no way around it: Sourcing managers and strategists must make data-driven decisions for their organizations. But where do they even begin? The key is to start by gathering essential data about your organization’s goals, resources, capabilities, and limitations, as well as local competitors—which can be hard to do when you’re just getting started with global manufacturing.
3) Set Targets
If you’re in business for yourself, you know that success is never easy—you need to set targets and monitor how well your company performs against them. If you’re working in an office setting, chances are your employer will keep track of these metrics for you; however, it’s important to be aware that they exist and that your global sourcing company works towards these goals every day. For example, if your team is working on a global sourcing strategy for 2021, 2020 should see your organization bring in revenue at four times last year’s total. By focusing on these short-term goals while keeping longer-term plans in mind, you can achieve whatever target or goal lies ahead.
4) Write Key Performance Indicators (KPIs)
What should you be measuring? This is an important question, but one that you can’t answer until you first decide what exactly you’re trying to accomplish. Is your goal to grow revenue by 50%? Increase margins? Reduce customer churn by 10%? Once you identify your objectives, write out your key performance indicators (KPIs)—the metrics that will enable you to determine whether or not your organization is making progress toward achieving its goals. Writing down these KPIs is not only an exercise in future forecasting; it also forces us to think through potential obstacles before they occur, leading us to discover solutions along the way.
5) Review KPIs
In almost every aspect of business, metrics help shape our progress and determine how we operate. This is especially true in sourcing strategies. In fact, The Institute for Supply Management defines Key Performance Indicators (KPIs) as A set of quantifiable business performance measures that are closely monitored and provide an early indication or warning sign about emerging problems or opportunities within a company. KPIs help us gauge success across all dimensions. Since outsourcing has grown immensely over recent years, it’s important to take advantage of KPIs for monitoring success and effectiveness throughout each stage.
6) Determine your Budget
A critical first step to any sourcing strategy is determining how much money you’re willing to spend. Not only will you need to figure out what your total budget is, but you’ll also need to consider how much your business can realistically spend each year on these services. For example, if you’re an existing business with profits under $100K/year, it may be more realistic for you to set aside $1-2K for outsourcing vs. if you’re running several profitable businesses that collectively generate over $500K per year. It can take time and some experimentation before you determine how much outsourcing makes sense for your business; just know that there are no hard and fast rules here.
7) Start Implementing Solutions
Step one in managing your future is to figure out where you want to be. Step two is to determine what steps are required to get there. Once you’ve done that, step three is putting your plan into action and here china sourcing company can help you. Whether you’re adopting more sustainable practices or changing up your office space, start taking action immediately by approaching each of these seven phases with thoughtful precision and execution. You’ll be amazed at how much difference small changes can make over time–and if we do say so ourselves, we’ve provided plenty of inspiration and information for making those adjustments right here on Impact: Positive Change.