For a long time now, small businesses have sourced goods, services and manufacturing from offshore regions. Our international supply chain expert, Kurt Cavano, considers the challenges of supply chain management in a domestic and global sourcing strategy.
An offshoring strategy has served many businesses well in the past, largely because it has done a good job of keeping costs down.
But in some industries now we are beginning to see a small shift in production back West, driven by a number of economic and market factors. A local supply chain can mean simplicity, speed and more control.
Factors influencing sourcing strategies
Three factors are beginning to stimulate the relocation of some production. Firstly, wages are increasing in offshore locations, beginning to offset the cost advantages that caused the original boom in offshore sourcing.
Secondly, some small firms are now producing specifically to sell to local markets and are taking production closer to the customer to deliver this strategy.
Lastly, we are seeing a power shift, particularly in consumer goods, where buyer demand is putting pressure on smaller companies to generate and deliver products faster, and to make changes to product lines more flexibly. This puts on-time delivery under strain when shipping timescales have to be taken into account. Some businesses producing bespoke or specialised goods find they need to source locally to be fast enough to satisfy customers.
The supply chain network
Whether sourcing is local or global, to be cost-efficient and flexible enough to meet ever-changing customer demands, businesses need to think of the chain of companies in their supply chain as a network and have in place technology that enables all members of the network to communicate and collaborate fully together. Businesses are now more dependent on partners than ever before.
Kurt Cavano is the vice chairman and chief strategy officer of GT Nexus, a cloud based supply chain platform provider. It helps companies to manage their logistics and trade processes. Kurt is responsible for maintaining the company's track record of innovation and market success, and for guiding key customer, industry and partner relationships.
I currently serve as vice chairman and chief strategy officer of GT Nexus, with overall responsibility for driving the company's strategic direction, for maintaining the company's track record of innovation and market success, and for guiding key customer, industry and partner relationships. more»