Subscribe to our free, weekly email newsletter!


Near-sourcing gains traction in supply chain

By Patrick Burnson, Executive Editor
November 29, 2010

Since issuing its study last summer, Global consultancy IDC Manufacturing Insights contends that U.S. manufacturers are continuing their flight from low-wage outsourcing.

“We seen a definite reversal of strategy,” said Simon Ellis, practice director, supply chain strategies. “Our study in July coincided with President Obama’s pledge to concentrate on U.S. exports, so that may have had something to do with it, too.”

In any case, said Ellis, U.S. companies are favoring a “hybrid model,” these days, as they cut their reliance on low-wage nations.

“As anyone can see,” added Ellis, “the wage structure in many developing countries is changing, and it may not always be cheaper to pursue this way of doing business.”
Especially when supply chain costs continue to rise, said Ellis.

As reported in LM, the worldwide study of over 700 small and medium-sized enterprises (SMEs) in the manufacturing industry was done on behalf of Infor and IBM.

According to researchers, there seems to be an increased focus on the importance of customer fulfilment in contrast with a previous emphasis on low-cost sourcing strategies.

The consultancy asserted that low-cost sourcing could result in lower responsiveness and poor customer service, higher costs, and additional risk factors such as supply chain disruptions, diminished IP protection and environmental concerns. The study indicated that North American and European manufacturers would focus on improving their own operations for the medium-term as opposed to aggressively looking to sourcing partners to cut costs.

One of the general conclusions of the study was that manufacturers were struggling to ensure customer fulfilment due to complex and global supply chains. This made gaining control over the “customer experience” very challenging.

IDC spokesmen stated six months ago that the results of the study perhaps should be seen as an opportunity for companies involved in global logistics services “rather than the more obvious threat implicit in the findings.”

“The challenge for logistics and transportation companies will be to provide SMEs with the reliability and visibility which they clearly lack and which is hindering their adoption of global sourcing strategies,” said spokesmen.

Furthermore, added IDC, the study suggests that a greater focus on the needs of smaller businesses could pay dividends for logistics companies.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Panjiva, an online search engine with detailed information on global suppliers and manufacturers, recently said it is opening up the “vault,” so to speak. The vault in this case is making its copious amount of trade data accessible through an Application Programming Interface (API), which enables customers to extract Panjiva’s trade data into their own database.

Freight transportation and logistics services provider Averitt Express recently announced it has rolled out improved transit times for less-than-truckload (LTL) service from the Midwest to Toronto and other cities.

Data issued by the National Retail Federation lowered its 2014 retail sales forecast, due to a slow first six months of the year (and largely negatively influenced by the terrible winter weather), but noted that retail sales are expected to be strong over the next five months to finish the year.

Anne Ferro, a ferocious advocate for greater truck safety and a constant thorn to truck drivers and some unsafe trucking fleets, says she is leaving as administrator of the Federal Motor Carrier Safety Administration. No successor has been immediately named.

Data issued by the National Retail Federation lowered its 2014 retail sales forecast, due to a slow first six months of the year (and largely negatively influenced by the terrible winter weather), but noted that retail sales are expected to be strong over the next five months to finish the year.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA