Monday, January 4, 2010

Where did it come from?

It was enlightening to read PriceWaterhouseCoopers (“Global Sourcing: Shifting Strategies” presenting the results of their survey of of retail and consumer company executives in eight countries .

It was no surprise to note that global sourcing is increasing and the issues surrounding it are becoming increasingly complex. While sourcing is global, in a large part to create a cost savings, no longer can a company select a factory, a country by only considering transportation costs and delivery times.

What struck me as I read through the report was the number of critical issues that must be understood, evaluated and managed relating to the creation of consumer products. We can begin with issues of country and currency risk that are essential to assess to decide where to obtain materials, where to manufacture a product. But beyond those categories, complicated themselves, it’s necessary to consider at least eight other broad categories. These topics include product safety, ethical issues (bribery, corruption), working conditions, security throughout the supply chain, environmental impacts (of the location, the processes), climate change and carbon footprint. This would be complicated in a static environment but every moment brings a news report, currency shift, snow storm or political upheaval that may change the equation.

Global sourcing isn’t simply having a t-shirt made someplace with low cost labor. Not anymore. It’s an amazingly complicated activity requiring a global view of the world, its limitations and a focus on its possibilities.

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