The Angst Associated with LCR Sourcing

The Angst Associated with LCR Sourcing

I have been reading many articles, as I am sure everyone else has, about the difficulties, negative impact, angst that has result from the upsurge in Low Cost Region (China, India, etc.) sourcing of products. To paraphrase a laid off manufacturing worker in Ohio, she “blames consumers like herself for wanting cheap foreign goods”. This movement is no longer just impacting the hourly production worker, but has begun to have an effect on highly skilled service workers such as programmers and financial analysts. Yesterday, my wife was telling me how her hair stylist has decided to have some needed dental work performed in Mexico for 20% of the price it would cost here in the Northwest USA. Imagine dental work plus a vacation in Mexico for less than the price in the USA!!

I personally do not see myself or my fellow Americans changing our desire for bargains (quality products at inexpensive prices), do you?? How does a business survive and prosper in this type of business reality?? I am not a proponent of “bury your head and hope LCR competition does not affect the business”!

I suggest that the business aggressively adopt several strategies:

1) Out source non-core sub assemblies, manufacturing, business processes to improve margins and/or starve the competition. Focus the business on its core competencies.

2) Step up internal innovation development to stay abreast or slightly ahead of the market (not to far ahead, remember the old adage “the leader takes the most arrows!”).

3) Establish a “brand” for your product, an image that entitles your product to be worth premium pricing in the market.

· Perceived superior quality (e.g. Lexus,… )

· Superior customer service (e.g. Whole Earth grocery stores, …)

· Leading edge technology (e.g. Google, …)

· Life style image (e.g. Coca Cola, )

I do not believe that doing nothing is a reasonable approach for your employees, business and customers.

-- Timothy Chen