2007 Low-Cost Country Sourcing Report

185 procurement professionals responded to the recent eyeforprocurement survey - senior executives from manufacturers, retailers and 3PLs operating in various industry vertical. Based on the responses to the survey, it is evident that while sourcing in low-cost countries is certainly a viable proposition, there are a number of issues that are sometimes not apparent at the outset. The eyeforprocurement 2007 Low-Cost Countrt Sourcing report examines the key drivers for sourcing in low-cost countries, as well as the risks involved. The report also compares the findings with the last year’s research.

Just over half of the respondents cited “lower labour costs” as their primary reason for sourcing in low-cost countries, and 43% said lower material costs is a major reason. The gap between these two drivers has widened since last year’s 48% and 47% respectively. A third of the respondents are under pressure from customers to reduce prices, compared with 42% last year. The percentage of respondents sourcing raw materials in low-cost countries has dropped from almost half last year (48%) to just over a quarter this year (27%). Less than 20% use low-cost countries as a source of IT, information & research and other commercial services. Almost half of all respondents cited “trade regulations” as the biggest obstacle, compared with 37% last year. The biggest positive change since last year’s survey is “poorly developed infrastructure”, with this being an obstacle for less than a third of the respondents, compared with almost half last year.

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