The past decade has seen a massive boom and bust on the global sourcing front. Scores of companies moved as much spend offshore as possible only to find that the total costs of doing business with suppliers halfway around the world was only worth it if they were serving local markets. Granted, in certain industries (e.g., textiles, apparel, high-tech manufacturing, etc.) global sourcing is now largely the norm, often because entire supply markets have moved abroad and local options no longer remain a choice. The US television market is a great example. Three decades ago, close to 100% of the televisions sold in the US were made in the US. Then the entire market moved offshore, initially to Japan, but now to other regions as well. In other industries, however, companies are increasingly re-examining how best to balance the local and global components of their supply chains.
If you’re curious about the latest trends in global sourcing, a recent Industry Week article sheds some useful light on the latest trends in the market. Quoting a study from Grant Thornton — who is not exactly known as a research powerhouse in the global sourcing arena — the article suggests that global sourcing is here to stay, yet is far from the only option that companies are considering. As a summary of the study, Industry Week suggests that 82% of respondents “indicated that some portion of their supply chain is purchased internationally, up from 77% last year.” In addition, “China remains the front-runner choice, with 28% sourcing from that country, up from 22% last year. What was the most interesting is only half of the firms surveyed (49%) have found international sourcing to produce a positive ROI.”…
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No surprise here. When the USA actually made everything domestically, it had one of the strongest economies in the world. As outsourcing accelerated, the economy weakened, to the point of the collapse that we have experienced today.
If American businesses want to become more efficient, they would be well advised to pay their lobbyists to lobby for a 90% reduction in the financial industry, and the elimination of immigration and guest workers from low-wage countries such as India and Mexico in high value jobs.