Time to rethink the Global Sourcing Model?

In a world where every aspect of business can be described as ‘challenged’ no area is more challenged than Sourcing.

Physically, economically, morally and ethically – no aspect is straightforward and there is a need to rethink models that have served us well for 20 years.

And many companies are doing just that. A recent wide ranging project took us to every continent where we discovered how companies are reacting to issues around cost, availability and increasing geopolitical uncertainty.

Many US companies that had previously had significant operations in China or Hong Kong have either moved out to Singapore or pulled teams back to the home office. They acknowledge that the talent pool in Singapore is not yet fully formed, but are not prepared to maintain teams in an increasingly hostile political environment. In many cases, facilitated by investment in technology, they have moved to a point to point distribution model, which negates the role of a large sourcing hub in Asia at all. And of course, near shoring is a universal imperative, driven as much by freight costs as politics.

Some European companies continue to operate in Shanghai and Hong Kong, citing the known and skilled supply base available, but further investment is unlikely and geographic diversification is a priority. Stakeholder pressure is now being added to cost implications and both shareholders and consumers are becoming increasingly vocal against oppressive regimes, evidenced by the current outcry over the treatment of the Uighur people in China.

We’d love to hear your views on this? What is your company doing to derisk future supply chains and respond to stakeholder pressure to reduce dependence on China?