World Trade - September 2008 - (Page 35) The next stage in re-defining the buyer-vendor relationship concerns volume. “Our clients grow between 10 percent and 15 percent per annum and as a result, their purchase volume with their suppliers increases accordingly,” adds Rice. That growth typically results in further price reductions as the manufacturer gets economies of scale due to the increase in volume. International advisory: sourcing expertise managed The current business climate is forcing companies to re-evaluate their funding, sourcing, and operating strategies. Relationships: interfacing internationally Typically a borrower travels to the foreign manufacturer’s location to make a determination for themself as to the efficiency of the manufacturer. In the Capstone model, the VP of Sourcing will travel and meet with the supplier to make the onsite determination. Meanwhile, Whaling initially began operating in Korea. Capstone has since transitioned Whaling from Korea to other Asian countries where the labor rate is lower and the quality is as good or better. Through the issuance of letters of credit and strict quality control, Whaling is now able to compete effectively in the U.S. market. In terms of overall manufacturing relationships, the borrower’s goods are reverse engineered in some instances. Capstone’s sourcing professional can determine what the best fit would be from a factory perspective. The finished product is then presented to the potential manufacturer and advised of the cost. A comparison is made between the historical cost data, the cost of the new factory and the existing factory. If the sourcing department approves the old factory, as well as the new factory, then both of the WTM09084GTNEX1.indd 1 WWW.WORLDTRADEMAG.COM 8/12/08 10:14:45 AM 35 http://www.gtnexus.com http://WWW.WORLDTRADEMAG.COM
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