The main reason why manufacturers source their products or materials from low-cost countries is, not surprisingly, cheap labor. That trend in fact is accelerating; when consulting firm Eyeforprocurement asked procurement professionals to list their primary reasons for sourcing overseas in 2006, "lower labor costs" received 48% of the tally (respondents could choose more than one answer); this year, when asked the same question, that percentage was up 6% to 54%. China, again not surprisingly, was the most popular low-cost country, at 76%. The choice "other Asia" (not counting India) was second with 53%, and India was third at 33%.
54% Lower labor costs
43% Lower material costs
33% Pressure from customers to reduce prices
27% Shorter distance to final customer's markets
21% Other reasons (e.g., take advantage of time-zone differences)
Source: Eyeforprocurement
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About the Author
Dave Blanchard
Senior Director of Content
Focus: Supply Chain
Call: (941) 208-4370
Follow on Twitter @SupplyChainDave
During his career Dave Blanchard has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeek, EHS Today, Material Handling & Logistics, Logistics Today, Supply Chain Technology News, and Business Finance. He also serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2010), which has been translated into several languages and is currently in its second edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.