EUROPEAN SOURCING IN ASIA: KEY BENEFITS & CHALLENGES
(and how You can mitigate them)!
Eurosia™ Sourcing Insight #1
Eurosia™ Sourcing Insight #1
THE 4 KEY BENEFITS YOU CAN EXPECT
Sourcing in Asia is the main lever to reduce costs of material and labour
30% Savings
20% Savings
5% Savings
Sourcing in Asia Redesign to cost (RTC) with R&D Nego:a:on
Source: C. Horvat, Eurosia’s Seminar ”(Out)sourcing in Asia” (March 28, 2014)
RTC depends on R&D, and negotiation has limits
#1 LOWER MATERIAL COST
Eurosia™ Sourcing Insight #1
Successful companies focus on products & materials with high saving potential and low risks
Source: C. Horvat, Eurosia’s Seminar ”(Out)sourcing in Asia” (March 28, 2014)
: Sourcing volume
#2 (MUCH) LOWER LABOUR COST
Eurosia™ Sourcing Insight #1
Worldwide relative mapping of monthly cost per worker (fully loaded, EU/US = 100)
0
10
20
30
40
50
60
70
80
90
100
France, USA, Singapore, Hong-‐
Kong
Slovenia, Taiwan, South Korea
Poland, Czech-‐Republic,
Hungary, Mexico
Morocco, Tunisia Russia, Romania, Thailand
India Central China, Bangladesh, Vietnam
Source: C. Horvat, Eurosia’s Seminar ”(Out)sourcing in Asia” (March 28, 2014)
Eurosia™ CEO Insight #3 #3 INCREASED OUTPUT CAPACITY…
… reducing the shortage risks thanks to alternative supply sources
#4 Opening a window to growth markets in Asia at relatively lower risks
India 4.7%
China 7.8%
Singapore 1.3%
Vietnam 5.2%
Myanmar 6.3%
Indonesia 6.2%
GDP Growth Rates (World Bank, 2012)
NOTE FROM EUROSIA: Investment & Development opportunities across growth Asia will be addressed in our future Eurosia Country BrieYings
Thailand 6.5%
Malaysia 5.6%
Philippines 6.8%
Eurosia™ Sourcing Insight #1
THE 4 KEY CHALLENGES YOU WILL FACE
(and how you can mitigate them)!
#1 LOW QUALITY
Eurosia™ CEO Insight #3
FIRST MITIGATION: deYine and communicate your expectations well
VISION + RESOURCES =
REALISTIC EXPECTATIONS
SECOND MITIGATION: start with mature products and keep your Yirst order small…
…while remembering that suppliers will also assess your real Volume & Commitment before committing
themselves (!)
THIRD MITIGATION: follow-‐up with continuous quality controls, on-‐site inspection and reporting
#2 HIDDEN COSTS
Eurosia™ Sourcing Insight #1
Low Labour Costs
Travel Cost
Risk Management Cost
Productivity Losses (learning curve)
Cost of Management Overhead
Low Materials Cost
MITIGATION: get the required expertise and prepare well (If you don't have the knowledge or country coverage required, it is worth the extra expense to get experts on your team)
#3 INTELLECTUAL PROPERTY (IP)
Eurosia™ Sourcing Insight #1
MITIGATION: carefully identify and keep your Core Business in-‐house
• New products • Patented components • Fundamental R&D • Value analysis • Integration skills
#4 INTERNAL RESISTANCE
Eurosia™ Sourcing Insight #1
Resistance to change from employees is one of the greatest challenges you may face…
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This topic will be addressed in our next Eurosia™ Sourcing Insight:
HOW TO MAKE MY TEAM WORK WITH LOW-‐COST COUNTRIES
well!
ABOUT EUROSIA™ Eurosia S.A. (www.eurosia.eu) is a European sourcing service provider headquartered in Luxembourg with a presence in six European and eight Asian countries. Our team of experts enable the European technology, industrial and construction companies be more competitive and innovate.
We deliver bottom-‐line results to our clients thanks to our methodology and on-‐the-‐ground experts in the sourcing of:
CNC machinery w Construction material w Electric components
w Mining & Quarrying machinery w Oil & Gas equipment w Packaging equipment w Raw materials w Renewable equipment
w Steel pipes, beams, structure w Telecom equipment
Our team identilies & selects manufacturers as well as sources, controls and buys products in China, India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam.
THEY TRUST EUROSIA™:
Our tenured European managers deliver local project coordination and client relations in English, Deutsch, français, italiano, Nederland.
Deliver attractive cost reductions w European supervision in Asia w European quality control w One-‐stop-‐shop in Europe and Asia w Flexible engagement model
Why European technology and industrial lirms choose Eurosia™:
DIGITAL AGENCY