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

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

Earlier today, leaders of key House and Senate committees related to transportation said an agreement has been reached for new long-term surface transportation in the form of a bicameral, bipartisan agreement Conference Report for the Fixing America’s Surface Transportation (FAST) Act.

While staving off contraction in the previous four months, manufacturing in November did not grow, according to the most recent edition of the Institute for Supply Management’s (ISM) Manufacturing Report on Business.

Rising Cyber Monday sales numbers continue to demonstrate the ongoing and emerging influence of e-commerce on consumer shopping habits and patterns and subsequently supply chain and logistics operations, too.

Diesel prices fell for the third consecutive week, with the average price per gallon down 2.4 cents to $2.421, according to the Department of Energy’s Energy Information Administration.

The 2015 Pain in the (Supply) Chain survey recently conducted by UPS coincided this year with qualitative interviews of healthcare executives in North America to gain further insights into trends, challenges and opportunities having an impact on healthcare logistics.


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

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA