Apparently, based on the discussion so far, outsourcing to geographically remote countries has introduced many additional difficulties. For one, the search for and identification of qualified sources for goods and services absorbs up to a precious half of the entire sourcing cycle, whereas up to 80 percent of the cost of product is built into the design and development phase when sourcing occurs, which requires a close cooperative relationship. Given the benefits of Web conferencing, retailers find it ever more expensive and time-consuming to travel long distances to development centers, since the costs of doing so may even negate the initial potential benefits of outsourcing. It is particularly costly and time-consuming to set up an international sourcing office, and it even then takes a few months at least to get new suppliers on board and running effectively. Additionally, increasing fuel prices and (fears of) outbreaks of diseases like SARS or bird flu can contribute to reduced executive travel and increased reliance.
But then, communication problems, caused by fundamentally different time zones, working days, and holidays, can further reduce supply network visibility and the closeness of the working relationship, thus seriously obstructing an effective demand-driven approach (see Demand-driven versus Traditional Materials Requirement Planning). Cultural and language differences are another hurdle to success, and even slight misunderstandings or miscommunication can prove quite costly. Lack of skills availability and consistency, along with differing quality standards, can also present problems with far- or near-shore sourcing. Since cultural differences are generally less pronounced with near-shore locations (and owing to the real concerns of political instability and currency fluctuation in some geographic regions), US retailers might still prefer to deal with the "south (or even north) of the border" options. On the other hand, alignment with EU laws can be complex, and EU laws favor dealing with EU and soon-to-be EU countries.
This could be particularly crucial and complex for companies that offer their sourcing services to other independent retailers and that must comply with those retailers' unique billing and documentation requirements, as well as with internal invoicing and vendor payment policies for goods bought on their own behalf. Again, an astute sourcing finance management package should be able to enumerate all the elements (line items) of an original order and, in turn, trigger the generation of other documents such the packing list, advance ship notice (ASN), the bill of lading (BOL), the commercial invoice, and the service invoice. These documents—and the detailed information regarding carriers, shippers, country of origin, export country, import country, and final destination—are essential for meeting the aforementioned stringent global trading security standards and for clearing customs without delay. This synchronization in the supply chain would be a major performance enhancement for speeding up the product-to-market time.
But then, communication problems, caused by fundamentally different time zones, working days, and holidays, can further reduce supply network visibility and the closeness of the working relationship, thus seriously obstructing an effective demand-driven approach (see Demand-driven versus Traditional Materials Requirement Planning). Cultural and language differences are another hurdle to success, and even slight misunderstandings or miscommunication can prove quite costly. Lack of skills availability and consistency, along with differing quality standards, can also present problems with far- or near-shore sourcing. Since cultural differences are generally less pronounced with near-shore locations (and owing to the real concerns of political instability and currency fluctuation in some geographic regions), US retailers might still prefer to deal with the "south (or even north) of the border" options. On the other hand, alignment with EU laws can be complex, and EU laws favor dealing with EU and soon-to-be EU countries.
This could be particularly crucial and complex for companies that offer their sourcing services to other independent retailers and that must comply with those retailers' unique billing and documentation requirements, as well as with internal invoicing and vendor payment policies for goods bought on their own behalf. Again, an astute sourcing finance management package should be able to enumerate all the elements (line items) of an original order and, in turn, trigger the generation of other documents such the packing list, advance ship notice (ASN), the bill of lading (BOL), the commercial invoice, and the service invoice. These documents—and the detailed information regarding carriers, shippers, country of origin, export country, import country, and final destination—are essential for meeting the aforementioned stringent global trading security standards and for clearing customs without delay. This synchronization in the supply chain would be a major performance enhancement for speeding up the product-to-market time.
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