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Practical Considerations for Evaluating the Benefits of a Low Cost Country Sourcing Strategy

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Executive Summary

Many companies have historically sourced a high percentage of their business to low cost countries and recent data indicates this sourcing strategy will continue in the near future. But is low cost country sourcing still a viable alternative for domestic companies that are looking to improve their bottom line? While there are instances when sourcing to off-shore suppliers will continue to yield savings, the past advantages of following this sourcing strategy will diminish over time. It is imperative for companies to consider all of the financial and risk management factors in determining the best source for new and existing parts and components, as well as understand the overall sensitivity of changes in key cost drivers that could quickly negate any expected savings.

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