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Sourcing and India, an opportunity for the Flemish SME’s? Unizo Internationaal 10.12.2009
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Sourcing and India, an opportunity for the Flemish SME’s?
Unizo Internationaal
10.12.2009
WealthTree
• WealthTree is an India-based advisory firm that assists foreign companies with India market entry and Indian companies with global expansion.
S. Venkataraman (Venkat)Managing DirectorPast Employers (India & UK): PwC, Aon, Hines
• As part of the Clear Vantage global network, WealthTree provides on-ground support with: identifying > evaluating > negotiating with > monitoring suppliers in India.
Ravi KrishnanStrategic Sourcing Practice LeadPast Employers (USA):Dell, Corning
Sourcing Sourcing is the process of acquiring materials and
resources by identifying, evaluating and engaging suppliers of goods and services
Consideration for Sourcing as an important aspect of a company’s Procurement Strategy can significantly lower costs and improve quality
Why Focus on Sourcing? Sourcing impacts your bottom-line! When done right, provides due consideration
for Total Cost of Ownership Ensures Procurement Strategy is in sync with
Business Strategy Diversifies supply base Rationalizes risks
Have you looked at your Procurement
spend recently?
Getting Analytical Analyze your Procurement spend
How much are you spending and for what? How similar are your contracts with different
suppliers? Understand what you are buying
Are your specifications to suppliers too stringent with respect to your customer requirements? Remember, over-engineering can cost you!
Understand where you are buying from Have you objectively rated your suppliers on
performance? Have you explored alternate global sources?Have you considered India as a favorable low-
cost sourcing destination for your products and services?
Fortunately, in this vast country, specialized industrial clusters have developed
• Engineering & Manufacturing• Automotive• Aerospace• Petrochemicals• Food Processing
• Information Technology Services
• Mining / Natural Resources
List of Typical Items Sourced Products
Electrical and electronic components Auto components and spares Machine tools Chemicals Pharmaceuticals Paper Textiles
Services IT services (software and website development; search engine
optimization) Design services (engineering product development) Information and Research services (legal research
outsourcing) Product testing
Items sourced from India could fall under one of these categories:• Direct Materials• Indirect Materials• Production Services• Business Services
º
Why India? India seen as a good overall sourcing destination
Source: AMR Research, 2009
Why India?India has a better cost position than China
Source: AMR Research, 2009
Examples of global companies sourcing products from India Automotive
Fiat Group: “Increasing its quantum of sourcing components by 70% to USD 1B by 2010”
Jaguar Land Rover: “Increasing its exposure to Indian auto component suppliers”
ICT Samsung & Nokia: “Increasing its investment in
domestic manufacturing based on favorable view of existing suppliers”
Aerospace EADS: “Sourced components worth Euro 100M in
2007; plans to increase this amount 10 times in the next 10 years”
Source: Quotes published in the global press
SMEs: Meeting of Minds Indian manufacturers and service providers
have been diligently working in recent years to drive quality improvements; that is, adopting the mantra of continuous improvement
have been paying increasing attention to global product compliance requirements
Several products for international markets are manufactured in Export Oriented Units (EOUs), typically located in FTZs/SEZs with access to superior infrastructure
India’s government continues to provide incentives to SMEs to leap forward
Tips for Flemish SMEs (when dealing with overseas suppliers) Take advantage of your presence in one of the most
connected locations in the world to source from low cost countries.
Focus on Total Cost of Ownership and not just cost savings that may be generated by labor-cost arbitrage in foreign countries.
Key considerations from chosen supplier environment should include: focus on quality, responsiveness in communication and delivery, respect for contractual obligations and commitment as an evolving organization (desire to get environmental certifications, as an example).
Know that the process right from identifying suppliers to having successful client-supplier relationships across linguistic and cultural lines is indeed manageable!
Tips on Low Cost Country Sourcing Be prepared that you will not come across a ready
database of quality suppliers. Choose your supplier with care -- do thorough due
diligence and take independent advice. Consider what kind of agreement you need and do
not give away too much information in advance of finalizing any agreement.
Do not assume anything -- find ways of checking progress without causing the other party to 'lose face'.
Tips on Doing Business in India Make sure that you have top management
commitment and adequate resources to manage a business relationship in India.
Visit the country and take time to build personal relationships.
Allow plenty of time for meetings and traveling around.
Do not underestimate how quickly the country is developing.
Understand the culture and do not be aggressive. Be patient -- it always takes longer than you think!
Contact Us
Johan van HammeLocated in Hove,[email protected]+32-495252182
Ravi KrishnanLocated in Mumbai, India
[email protected]+91-9987192826
