-- Defining a clear sourcing strategy with specific targets and plans. The study revealed that 87 percent of companies have sourcing targets, but only 33 percent have translated those targets into specific action plans. -- Integrating China suppliers and R&D into design. More advanced companies have found that products designed elsewhere limit the benefits of China sourcing. The key is to leverage Chinese supplier's capabilities by integrating the suppliers and China technology centers into product design. -- Gaining 100 percent transparency into sourcing volumes and savings. Leading companies have developed country-specific scorecards and data collection systems that provide clear transparency, but many still operate in the dark. -- Addressing real and perceived risks. These risks include fluctuations in exchange rates, changes in the costs of labor and materials, power outages, quality problems, and transportation delays. Addressing these risks is one of the most important practices for overcoming internal resistance.Other key findings:
-- A growing number of companies are consolidating their local and global China sourcing activities to leverage scale and increase their negotiating strength with suppliers. In fact, 64 percent of the companies surveyed have merged these two functions under one organization. -- Savings vary widely from a reported high of 60 percent of landed costs for commodities and products sourced from China, with an average landed- cost savings of more than 20 percent. -- The volume of China sourcing also varies widely by industry and company, depending on how developed the supply base is and how long the companies have been active in China.China sourcing -- and the skills needed to succeed -- will continue to evolve. Approaches that were best practices just a few years ago are now standard in most China sourcing offices. As coauthor David Lee notes, "To stay ahead in this arena, companies need to continuously reinvent themselves." To receive a copy of "Sourcing from China: Lessons from the Leaders" or to speak with a BCG officer about its findings and insights, please contact Eric Gregoire at + 1 617 854 4570 (gregoire.eric@bcg.com) or Gu Li at +86 21 2306 4069 (gu.li@bcg.com). About The Boston Consulting Group Since its founding in 1963, The Boston Consulting Group has focused on helping clients achieve competitive advantage. Our firm believes that best practices or benchmarks are rarely enough to create lasting value and that positive change requires new insight into economics and markets and the organizational capabilities to chart and deliver on winning strategies. We consider every assignment to be a unique set of opportunities and constraints for which no standard solution will be adequate. BCG has 64 offices in 38 countries and serves companies in all industries and markets. For further information, please visit our Web site at www.bcg.com.
Contact Information: Contact: Eric Gregoire + 1 617 854 4570 Gu Li +86 21 2306 4069