Many companies now regard the sourcing of materials and parts in developing economies as a key means of reducing their costs and reaching high-growth markets. New offshore locations are also emerging; although China and India still lead the way, the Philippines, Brazil and Russia are becoming increasingly popular, as lack of manpower drives up production costs in more established locations.

However, strategic sourcing isn’t easy. Our research shows that 35% of companies fail to realise all the benefits they anticipated from projects, and many companies admit that they struggle to manage such projects. The biggest challenges include ensuring quality control, risk management and continuity of supply, but ethical issues are also coming to the fore.

• Determine which materials and parts are suitable for sourcing elsewhere in the world;
• Analyse the potential of different locations, including the impact of different tax regimes;
• Social-cultural implications of your business venture
• Establish link with the right authorities and local officials