Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. This week, I\u2019ll be reviewing a whitepaper entitled \u201cInternational Sourcing: Offshore or Nearshore?\u201d From Grant Thornton and CFO.com.<\/p>\n
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The first paragraph of this whitepaper indicates that the whitepaper is based on a survey that Grant Thornton conducted with World Trade<\/em> magazine. I\u2019m sorry, but I have to admit that I became concerned about this validity of this whitepaper just by reading this paragraph. First, the authors didn\u2019t disclose the number of respondents to the survey and, second, I associate Grant Thornton with being an accounting advisory firm powerhouse and not necessarily a thought leader in the sourcing field. So I knew I would view the findings through glasses of skepticism.<\/p>\n That skepticism kicked in when the paper indicated that 77% of \u201cmajor US companies\u201d are sourcing internationally. When I think of \u201cmajor US companies,\u201d I think of the Fortune 500. A quarter of the Fortune 500 not sourcing internationally? Seems a bit high. So, perhaps we have different definitions of \u201cmajor US companies. But the whitepaper has given me no idea what Grant Thornton\u2019s definition is.<\/p>\n The end of the introduction gave me a little more confidence in what was to come in the whitepaper, saying that \u201cthere is a growing awareness that an effective supply chain requires What follows is a statistic-rich analysis of international sourcing practices and plans. Examples of such statistics include findings that 19% of respondents spend between 51 and 100 percent of their supply chain budgets internationally and 79% of respondents who source internationally report that they benefit from lower costs.<\/p>\n However, the statistics that I found most interesting were related to the top six problems experienced with, and ROI of, international sourcing. The top two problems were late deliveries and poor quality products at 61% and 43% respectively, with customs delays coming in a close third. The big shocker was that the whitepaper indicated that a whopping 47% of respondents \u201csee offshoring as as neutral or detrimental to their ROI.\u201d<\/p>\n How do these problems and the apparent lack of ROI affect international plans, both in the recent past and for the future? Well, 28% of respondents indicated that they had brought sourcing closer to the U.S. in the past 12 months and 45% indicated that they are planning to bring sourcing closer to the U.S. in the next 12 months, \u201crelocating sourcing to Mexico, Canada and, in some instances, the U.S.\u201d<\/p>\n Now, I hate to say it, but just having suppliers closer to your headquarters does not mean that late deliveries and quality defects will just evaporate. I hope that readers don\u2019t interpret nearshoring as an instant fix for problems they\u2019ve experienced with suppliers in Asia because, if they do, they may just be in for a big time unpleasant surprise!<\/p>\n The whitepaper closes with recommendations from Grant Thornton\u2019s \u201csupply chain experts\u201d (none of whom, by the way, have a title that includes any mention of supply chain or sourcing). Though I\u2019m sure I\u2019ve sounded cynical in this review, I actually agree with Grant Thornton\u2019s recommendations as they have at their core the theme of being agile and able to adapt to change as well as to assess one\u2019s own supply chain strategy and not blindly follow trends. I\u2019ll close this review with two excerpts that I feel are particularly applicable in the economic environment we are currently in:<\/p>\n \u201cWhen the economy recovers, which it inevitably will, companies will need to \u201c\u2019A one-size solution does not fit all. You need to look at each of your suppliers on a case-by-case basis and determine what makes sense for your company. At the same time, you\u2019ve got to become more flexible to respond to changes in the market. It\u2019s a completely dynamic process that requires greater expertise and knowledge of all the factors that can affect your global supply chain,\u2019 concludes (Tim) Dumond, (principal with Grant Thornton\u2019s Corporate Advisory and Restructuring Services).\u201d<\/p><\/blockquote>\n Though this was a pretty thorough review of this five-page whitepaper, there are still some nuggets of good information in it that I haven\u2019t covered here. You can download your own copy from CFO.com (registration required).<\/p>\n","protected":false},"excerpt":{"rendered":" Welcome back to another installment of Whitepaper Wednesday here on […]<\/p>\n","protected":false},"author":12,"featured_media":4058,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2726","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n
\nnot just low costs, but also flexibility, responsiveness and adaptability to changing marketplace needs and conditions. As always, cost-per-piece matters. But today there are many more
\n\u2013 and more complex \u2013 variables entering into supply chain decisions.\u201d Agreed.<\/p>\n
\nposition themselves to react quickly to [increasing] demand\u2026\u2019The more nimble
\nthe supply chain, the quicker you can react to changes in customer demand \u2013 or
\nchanges in the supply market. Companies certainly do not want to lose
\nopportunities for sales because of long transit times. The potential advantages
\nof locating manufacturing facilities close to distribution centers, such as
\nshorter, more reliable delivery times and lower shipping costs, are certainly
\nworth factoring in to your decision,\u2019 comments (Steve) Lyman, (Grant Thornton
\nAdvisory Services partner).\u201d<\/em><\/p>\n