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Language: English

Learning from leaders. An executive guide for managing risk in global sourcing


Global Sourcing Spend Management Supply Management

Of all the procurement and supply chain trends – opportunities and threats – to reach the executive boardroom over the past decade, global sourcing has elevated itself to a choice place, dominating the focus of a great many conversations. What is perhaps most remarkable about global sourcing throughout this timeframe is the speed at which companies adopted their strategies to support a rapidly transforming marketplace environment. Even though global trading has been around since before the time of Marco Polo in the 1200s, the past decade has seen a period of punctuated equilibrium (for example, an extremely rapid series of transformations) for global sourcing, starting first with cost-based sourcing arbitrage, and better known as low cost country sourcing (LCCS). Labor-based cost and occasional material cost advantages often drove many initial and ongoing LCCS opportunities. Next, as the margin benefits of LCCS opportunities began to erode in many markets, organizations began to focus more on supply localization, investing more significantly in regional markets to either help ensure the availability of local material and services to access potential global customers or to further develop export supply bases in a partner-like model. Most recently, companies have begun to investigate the specific meaning of “global” in global sourcing advantage and they are often finding that past strategies and approaches no longer yield the same advantages that they once did, often for a myriad of reasons.


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