Entrepreneurship and Outsourcing – Part 3


“The important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles”
—- Azim Premji

One of the major aspect of entrepreneurship is die-hard focus, which in the long run becomes the foundation for success. Outsourcing non-core activities helps one to focus on the core activity of the business and maintain a strong key success factor aspect steadfastly in this competitive world.

Here I would try to bring about the benefits of outsourcing manufacturing activities. In our business where we are into sourcing of products globally for a client the major benefits (to name a few) which accrues to the client are:

Lower investment in Non-Core manufacturing
When a client sources the products from others who are established players with existing infrastructure, helps the client in doing away with unnecessary investments in infrastructure which means not only reduced upfront investment but also helps in making faster decision on the product line, eg. The client can readily go for a product change or discontinue the product if she feels so. This helps in easier and less financially painful option for a business to discontinue the product. The model of sourcing is widely followed by organisations where the initial investments on the infrastructure is done by the vendors against assured minimum order quantities. This becomes a win-win situation for both the businesses where one benefits from lower investment and the other benefits from assured business for its products.

Lower market risk
In the model of sourcing of products, the market exposure of the organisation can be controlled at each step of the product ideation to product launch and its feasible continuity in the market. The risk is somewhat shared by the principal and the vendor. The benefit for the client organisation is that it can take strong decisions on the product lifecycle more pragmatically because the cost involvement will be lesser in such decisions. While the vendor can benefit by introducing the product to new clients or investors who might be interested in the product idea, thus becoming a low-risk affair for both – the client organisation as well as the vendor.

Technical inputs
Sourcing model in manufacturing segment is ideal when the relationship becomes a symbiotic relationship. Eg we can Anshira Ventures Pvt Ltd, try to make sure that our clients gets a lot of technical inputs from the vendors from whom we source the products for our clients by engaging closely with our clients requirements and the expertise of the vendors. We select vendors who are experts in their respective fields and fits the requirements of our client and create an idea/expertise/technical exchange platform from where our clients benefits using the inights of the vendors who are experienced multifold in their segment.

Focus on core areas
We have seen that our clients at Anshira Ventures are able to focus on their core areas. Eg when we source products based on the specific requirements of our client, the client leaves the entire scope of activity for the sourced product on the vendor thereby releasing valuable time for the client team to work on the activities which they would lie to focus on. This helps in spreading the resources effectively and efficiently which results into better products and better options for the client organization.

Competitive rates / market
Sourcing of parts helps the organisation to price its market offerings at a competitive rate as a result of lower initial investments on the manufacturing infrastructure. Even the vendors are able to offer competitive rates because of the economy of scale it can achieve since the vendor supplies to multiple clients – which could not be matched by a single client. This holds valid for non-core products sourced. Anshira Ventures helps clients by involving aggressively in the negotiation rounds with the vendors so that the client benefits from a very competitive rate.

The above are a few of the benefits which accrues directly to both the vendor and the client organization in the Sourcing Model. There are various other benefits which indirectly assists like the faster turnaround period for the product which saves time for the client organisation, putting the old saying “TIME IS MONEY”, true.

Satish Nair is Management professional and a First Generation  Entrepreneur  with a degree in  Mathematics from Calcutta University and Masters Degree in Marketing Management from Pune University. He has experience in marketing, branding and has worked a Business Head in a Chinese company looking after operations in China, Macau, Singapore and Taiwan. He has written case studies, papers etc for institutions like IIM-B, KJ Somaiya, ICBM Hyderabad. He also has been visiting lecturer at Raffles Millenium Business School in Bangalore. He is currently the Managing Director of Anshira Ventures Pvt Ltd which is into sourcing of products from China and Indo-China trade consultation.

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