Do the Benefits of Global Sourcing Still Add Up?
Supply and Demand Chain Executive has recently picked up its coverage of global sourcing topics. Much of this recent coverage has really hit the mark. For example, a recent guest submission by John Brockwell of JP Morgan Chase questions whether global sourcing is really worth it anymore. In my view, this a fair question for US companies in today's environment owing to concerns over product safety and declining -- or lost -- savings from the troubled dollar. Brockwell suggests that there are many reasons to still consider global sources ranging from "access to fresh research, design or specialized intellectual capital" or "plans to sell or service locally."
Even more important than the rationale for global sourcing, he offers up a decision process that executives should ask themselves about whether a specific global sourcing decision makes sense. While much of what he has to say will be news only to those getting started with global sourcing, the advice is valuable indeed. But is Brockwell accurate in his analysis? For the most part, I believe that much of what he has to say could have saved many companies from poor global sourcing decisions had they followed the advice in the article in the first place. Check out the piece for yourself and decide for yourself. It's more than worth a few minutes of your time.
- Jason Busch
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What are the issues about sourcing across borders that make it more difficult than domestic sourcing? Distance? Sometimes. However, Guadalajara, Mexico is closer to Chicago than San Francisco is. There are huge areas of Poland closer to Berlin than Munich is. If your product is "economically dense" enough (high value per kilogram) to be able to justify air freight, it's only a day or two more to get goods to a US port of entry from a supplier near any major airport. And if your customs clearance is more than a day or two something is wrong with your processes.
He does raise a few legitimate issues that are specific to border-crossing: Duties and geopolitics are two.
Sometimes controlling the vocabulary of the discussion can preordain the conclusion. Why should domestic sourcing be the norm and global sourcing be something special? Would you consider sourcing only in your home city or state? Why would you draw a line at a national border? That just doesn't seem appropriate in the 21st century.
All of the writer's suggestions on questions to ask before placing that overseas purchase order make sense. And I would argue that smart companies are reviewing their answers to these questions more rigorously than say a couple of years ago. But to suggest that global sourcing might not make sense anymore as a sort of a blanket statement seems really quite silly. As for China hysteria, "this too shall pass..."
But I can’t agree with Jim on some points, for environment pollution, economy development is always go with environment violation, especial its rate is near 10% , but Chinese government already notice that, many related laws and regulations have been issued, thousands of plants have been shut down, huge money has been put into environment project, etc… they are doing more than lip service.
For the product quality, I’m not sure the products in US consumers’ hand are bad quality or hazardous, but if so, I think you are unlucky to find bad suppliers in China, there are many many good suppliers here to provide high quality products, best service. The sourcing team should be trained well or localized in China to get supplier development done.
As for the concern of citizens’ safety, I think more and more people here in China is wake up to request as much as you do in United States, That’s why the labor cost in China is losing its competitiveness…