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Borderless Sourcing

Strategy Formulation Report Synopsis

Submitted by:

Group 1

Naina Agrawal A002

Nitin Amlani A004

Sandip Chandran A013

Vinit Chawla A014

Sweenie Dabad A017

Nooruddin H A026

Abhinay Tiwari A062

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Borderless SourcingBorderless Sourcing is a strategic procurement concept with an International Focus. This demands a

cross-border search for suitable suppliers.

Definition

Borderless Sourcing involves identifying, evaluating, negotiating and configuring supply across multiplegeographies to reduce costs, maximize performance and mitigate risks.

Sourcing locally or globally requires organizations to take decisions to balance the tradeoffs of cost,

performance and risk. But Borderless Sourcing involves additional challenges related to the variability of

non-price or "hidden" cost factors such as cross-border freight and handling fees, complex inventory

stocking and handling requirements, and a multitude of documentation and regulatory compliance

requirements.

Rise of Borderless Sourcing

The major retailers started setting up overseas buying offices to help reduce the gap between buyer andsupplier and find lower costs and better quality products. Significant business benefits have been realized

in the form of improved gross margins and increased sales, while at the same time providing exceptional

value for money to consumers through their own brands.

Due to fear of losing out to Competitors, Borderless Sourcing became a norm in retail industry among the

major players.The result was a positive cycle of growth: cheaper products driving increased sales, fueling

an increase in sales footage and new stores, requiring more new products to fill the stores, all to satisfy

the growth in customer demand.

The following exhibit represents the process of Borderless Sourcing and Logistics. The process will be

explained in detail in the project report

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The Challenges

KPMG International Commissioned the Market Research Company TNS to conduct a survey of executives

sourcing products for Consumer Markets companies in Asia Pacific.

Following are demographic details:

Following are some of the challenges identified by the Survey. These and other challenges will be

explained in detail in the report:

Focus on price reduction is not enough, there is now need to meet rising expectations for quality,innovation and adherence to social and environment standards.

While operational risks have been falling, reputational and political risks are increasing. Concerns regarding financial pressures faced by suppliers, which are operating on razor thin

margins in the environment of rising production costs and changes in rebate and tax policies.

The need to understand suppliers and the entire supply chain for adherence to Foreign CorruptPractices Act (FCPA).

The report will also highlight the comparison between Local Sourcing and Global Sourcing.