Global Sourcing to Give You Benefits of Economies of Scale
Presented By: Dragon Sourcing
Introduction The concept of local procurement has been replaced by global sourcing. Producers of goods and services no longer depend on local supplies for sustenance. Instead they venture out to the entire world and look for production factors that are of international quality and affordably priced.
Economies of Scale To earn the benefits of economies of scale it is necessary to use available resources to their optimum level. Resources: capital, labour, land, raw materials, and technology need to be utilized to their optimum extent for yielding returns that justify their usage. To achieve this, size of market must commensurate to level of production of goods or service
Globalisation Globalization has not only expanded size of market but also created more opportunities on the supply side. Producers instead of relying on local sources for their factors depend on a global source.
Factor Costs The reasons for depending on such a source are essentially economic. In an effort to lower costs, producers of goods and services remain in the lookout for factor products that are priced less without compromising on their quality. For this purpose their search goes beyond local areas and spreads over to overseas countries.
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