In this generation of tough competition it is vital to reduce costs and increase profitability. One of the most convenient ways of achieving this is to reduce production cost ideally achieved by reducing procurement cost of different factors of production. Land, human resources, capital, technology and raw materials are the ingredients for a manufacturing unit. With opening up of markets and global sourcing it has become easier for producers of goods and services to procure these factors of production at cheapest rates.
Traditionally, these factors of production were procured from nations or territories that offered minimum cost. It was practice among manufacturers to source capital from capital intensive economies and labor from labor intensive economies. Further, it was a global practice of producing capital rich goods in countries having abundance of capital and human intensive goods in countries having abundant population. Though this basic pattern of localization of industries still remains, opening up of markets has increased the possibilities of industrialization.
Sources have opened up significantly, with advancement in technology. The world is now a more closely connected place with widespread use of internet. Resources are no longer viewed based on geographical advantage but as a global availability. These resources could broadly be classified into human resources, technological resources including capital, and raw materials.
Human Resources (HR)
Of all available resources, HR is perhaps the most versatile and productive. Manufacturers worldwide are continuously on the lookout for the most eligible candidates from all corners of the globe. Human resource consultants and leading business houses carry out interviews periodically looking for the most accomplished candidates. Availability of candidates’ profiles online has made the job easier for employers and job providers.
Business houses and industrial establishments source trained manpower from leading universities and colleges internationally. Specialists are now recruited regularly from premier technical institutes in order to acquire competitive edge internationally. Companies also spend significantly on enrichment of human capital engaged in different levels of production and marketing.
Technology together with capital input is the next important factor of production for an economy in general and a unit in general. Technology is also a global resource that is universally available to producers of goods and services. Competitive advantage always lies with an organization that employs the latest technologies. These technological processes relate to manufacturing, communications, logistics, publicity, distribution, and marketing. Access to technological resources has enabled marketers and manufacturers improve their operational processes thereby offering competitive advantages.
Raw materials such as agricultural products or minerals are vital constituents of a production process. Global accessibility to these has increased the capabilities of producers and sellers. In an effort to keep price of their goods or services within competitive limits, producers procure raw materials from cheapest sources. This is easily done while following the practice of global sourcing. Opened up markets give you access to the most affordable raw materials, be they farm products or minerals.