Global Sourcing – Think Global. Act Local

Global Sourcing – Think Global. Act Local

Posted by Pete Loughlin in Global Sourcing, Vendor Risk Management 06 Jul 2010

Purchase to Pay, P2P and Dynamic DiscountingThe supply chain world is changing. The disruption in Europe recently caused by the grounding of aircraft as a result of the volcano in Iceland; the soaring labor costs in Asia and the far East; the green and ethical agenda that has taken hold in much of the developed world. Doesn’t it tell you something?

The New York Times published an insightful article on the impact of rising labor costs in China on Apple’s supply chain and the iPhone in particular. In response to cost increases Foxconn Technology is reported to be moving hundreds of thousands of workers away from this country’s dominant electronics manufacturing center in Shenzhen toward lower-cost regions far west of here, even deep in China’s mountainous interior. It was Foxconn who, in response to complaints about working conditions that had driven some employees to suicide, increased pay by 20% (The Guardian). It begs the question, how sustainable is the global sourcing model? At what point will consumers say “No” to Apple – even for the sexiest gadget on the planet. When will the cost of risk mitigation tip the balance towards local supplies. And when will there be another Eyjafjallajökull?

Changes in consumer demand, cost and supply chain models that are becoming non-viable and supply risks inherent in globally dispersed supply chains means that it’s time for sourcing to change its mind set: “Think Global. Act Local”

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