Executive Briefings

Stay on Your Toes When Sourcing from Low-Cost Countries

If you're like most manufacturers, you've spent the past few years consolidating suppliers, reducing the inventory you carry, and sourcing goods from low-labor-cost countries. These tactics have meant survival in many vertical sectors where manufacturers must drastically cut costs to remain competitive.
But global sourcing has caused troubles, especially in the consumer-packaged goods industry, where quality problems and corporate social responsibility issues threaten to destroy overnight brands built up over decades. The problem for most manufacturers is that they can't pull back their purchasing from overseas to reduce risk. With threats looming large over today's increasingly fragmented supply chains, manufacturers must turn to processes, organizational behavior, and technology tools to help mitigate risk.
"The dilemma is all of those things manufacturers pursued to reduce cost are largely irreversible," says Jim Lawton, vice president and general manager of Dun & Bradstreet's Supply Management Solutions division. "You can't bring all of your spend back to the U.S., and you can't stock up on inventory. Manufacturers don't have the resources to deal with the new risks created by overseas sourcing. They need help identifying the right suppliers and discovering as early as possible where the problems will be."
There are several strategies for reducing purchasing and sourcing risk. The safest approach is a combination of software tools and business processes aimed at continuously monitoring the supply base, along with an overall strategy to reduce risk.
Source: Managing Automation, http://www.managingautomation.com

If you're like most manufacturers, you've spent the past few years consolidating suppliers, reducing the inventory you carry, and sourcing goods from low-labor-cost countries. These tactics have meant survival in many vertical sectors where manufacturers must drastically cut costs to remain competitive.
But global sourcing has caused troubles, especially in the consumer-packaged goods industry, where quality problems and corporate social responsibility issues threaten to destroy overnight brands built up over decades. The problem for most manufacturers is that they can't pull back their purchasing from overseas to reduce risk. With threats looming large over today's increasingly fragmented supply chains, manufacturers must turn to processes, organizational behavior, and technology tools to help mitigate risk.
"The dilemma is all of those things manufacturers pursued to reduce cost are largely irreversible," says Jim Lawton, vice president and general manager of Dun & Bradstreet's Supply Management Solutions division. "You can't bring all of your spend back to the U.S., and you can't stock up on inventory. Manufacturers don't have the resources to deal with the new risks created by overseas sourcing. They need help identifying the right suppliers and discovering as early as possible where the problems will be."
There are several strategies for reducing purchasing and sourcing risk. The safest approach is a combination of software tools and business processes aimed at continuously monitoring the supply base, along with an overall strategy to reduce risk.
Source: Managing Automation, http://www.managingautomation.com