Low-cost country sourcing is a strategy of buying from markets with a lower expected production cost base. The decision should be based on total landed cost and supply performance rather than wage rates or quoted unit price alone.
Low-Cost Country Sourcing: what the sourcing record should show
| Area | What to record |
|---|---|
| Decision | Model the expected savings against tooling, quality control, travel, inventory, freight, duty, currency movement and longer replenishment cycles. Recalculate when volume or route assumptions change. |
| Evidence | Compare like-for-like specifications and document the cost baseline, country assumptions, supplier capacity, quality plan and contingency route. |
| Watch point | The approach trades some purchase-price potential for greater distance and coordination. It can work well when demand is predictable and the specification is stable. |
When does Low-Cost Country Sourcing matter?
Model the expected savings against tooling, quality control, travel, inventory, freight, duty, currency movement and longer replenishment cycles. Recalculate when volume or route assumptions change.
What should buyers check before approving Low-Cost Country Sourcing?
Compare like-for-like specifications and document the cost baseline, country assumptions, supplier capacity, quality plan and contingency route.
The approach trades some purchase-price potential for greater distance and coordination. It can work well when demand is predictable and the specification is stable.
