Inter-market Sourcing

So what makes the Inter-market Sourcing of finished products notably different from any other type of finished product sourcing?

 

A market has a specific regulatory framework such as FDA regulations or REACH.  Products manufactured outside the market need to comply with the destination market regulation.  This can be a significant barrier.   

 

Secondly, and most importantly in the context of Supply Chain Design, the replenishment lead time will be relatively long compared with local sourcing arrangements.  In consequence responsiveness to unforeseen demand suffers. This situation is particularly acute for volatile and unpredictable products especially during new product launch.  Carrying additional inventory to compensate for the increased lead time is not always the best remedy and, especially during the launch of new products,  it carries an obsolescence risk..

Why bother?

Given the difficulties associated with Inter-market sourcing, "Why bother, " is a valid question. The main reasons why Inter-market sourcing is considered to be an attractive proposition include:

  • It supports smaller markets enabling you to gain a toe hold with limited risk to capital.
  • It provides a framework for greater product harmonisation, technology convergence and common quality standards, improving the speed of innovation roll out.
  • It improves speed to new markets.
  • There may be the potential to significantly reduce product costs driving margin improvement and providing more "fuel for growth."
  • It gives scope to manage the capacity utilisation in the overall network giving the potential to reduce capital expenditure.
  • There is scope to manage seasonality effects and provide contingency supply more efficiently.

 

Establishing a valid business case for Inter-market sourcing is just the first and usually the easiest step.  Developing an End 2 End Supply Chain Design which is operable and robust to uncertainty is a much more significant challenge.

 

The outline process flow is shown below.

 

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Outline Process Flow

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