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.
| 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 the term matters
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.
Checks before approval
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.
