02/01/09
“Knowledge-Based Sourcing In China”
In an article in the January/February 2009 issue of Research Technology Management, Booz & Company Partner Ron Haddock (Europe), Principal Michael Pfitzmann (North America) and Senior Executive Advisor Reid Wilk (North America) wrote that companies doing business in China should “pursue a dual strategy of using the Chinese platform to make more sophisticated product components for export and simultaneously seeking to penetrate the domestic market.” As such, they advocate a strategy of knowledge-based sourcing, a new approach to working with suppliers in China and other low-cost countries. Citing the example of General Motors Corp., the authors identify three imperatives as essential to successful knowledge-based sourcing: Know your suppliers inside out; develop strong relationships with a few suppliers; and work together with them on continuous improvement.