LCR-HCR


LCR-HCR

 


 

Low-cost regions sourcing is a strategy in which a company sources materials, services and technology from countries with lower cost structure to high cost countries in order to cut operating expenses. This activity falls under a broad category of procurement efforts called global sourcing.

 

The process of low cost sourcing consists of two parties. The customer and the supplier countries like USA, UK, Canada, Australia, and West European nations are considered as high cost countries (HCR) like China, India, Indonesia, Bolivia, Brazil, Russia, Mexico, and East European nations are considered low cost countries (LCR). In low cost country sourcing the material flows from LCR to HCR while the technology flows from HCR to LCR.The primary principle behind this strategy is to obtain sourcing efficiencies through identifying and exploiting cost arbitrage between geographies.

 

At APAC we have divided our area of work into two parts viz., the Low Cost Regions [LCR] where our suppliers are located and the High Cost Regions [HCR] viz., where our customers are based.

 

We urge our customers in high cost regions, not to shut their manufacturing facility but to collaborate with low cost region suppliers and outsource their non core activities and continue manufacturing. The high cost regions have financial strength and superior technological know how to support R&D activities. We consult them to focuss on developing innovation and manufacture products which are more susitainable in the longer time frame.

 

Not necessarily all "low cost countries" are destinations for Low cost sourcing, but only those countries with relatively stable political and economical environment, modern infrastructure and acceptably compatible legal system are considered to be ideal for sourcing. Examples and most popular regions are China, Indonesia, Thailand, Vietnam, Malaysia, India, Ukraine, Romania, Bulgaria, Mexico, Bolivia, Brazil and Czech Republic.

 

Looking at the macro picture, this entire strategy is not only fostering economic growth but also playing a major role in maintaining a social equilibrium in this world and a better place to live.