Assess the market

4 July 2007
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05 July 2007 | Siobhan Cameron

Benchmarking your firm against other companies' approaches to offshoring often proves inconclusive and delays global sourcing, according to experts.

Analysts at the Everest Research Institute say the only way fully to understand worldwide sourcing opportunities is to look at comparable deals on the market and assess the attributes of each.

In an online conference, the firm advised against using requests for proposals as a first step in the sourcing process, despite this being common practice, as they rarely accelerate the process.

It said the key to effective sourcing is to engage with suppliers more effectively, which leads to better decision-making.

Its other recommendations were: determine the desired outcomes; educate the decision-making team on the current market; encourage the use of market research to aid location decisions; and research savings potential.

The conference followed last month's comments by Peter Bendor-Samuel, chief executive at the Everest Group. He said despite the growth of global sourcing, supply far exceeds demand.

"Although more than 85 per cent of companies that have offshored have achieved average net savings of 30 per cent, only a handful of 'mega' companies are heavy adopters of offshored services."

Jim Mikell, associate principal at the group, believes the slow uptake is nothing new.

"Similar to the early days of the internet or the emergence of just-in-time delivery in the 1980s, less than 10 per cent of leaders are fully proactive in leveraging the available opportunities," he said.

SMjul2007

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