Over the past decade, the E&C sector has lagged behind manufacturing and retail industries in sourcing materials from low-cost countries. However, with companies facing growing pressures of low margins and cost inflation, they are increasingly realising the potential benefits of low-cost sourcing (LCS) in order to maintain their competitiveness. Our experience has shown that as much as 10% of E&C companies' total spend could be suitable for LCS and that on average a 30% cost saving is achievable when sourcing from low-cost countries. In a low-margin sector this has got to be worth exploring further. While LCS-suitable material purchase remains a relatively small percentage of total spend for many E&C companies (less than labour, transport and other professional services), LCS savings can still make a substantial contribution to the company’s bottom line.
How PwC can help you
PwC works to help procurement heads and departments within E&C companies hone their sourcing strategies. Our experts from performance improvement, tax and sustainability help companies in the sector consider the operational, financial and reputational implications of sourcing from low-cost countries. We help companies to conduct a cost analysis, identify suitable suppliers and partners and guide them through the supplier selection process, going on to help companies draw up supply agreements. We have excellent credentials in this area and have helped companies in E&C and related sectors to secure dramatic cost savings of around 30%.