Global Sourcing: Is It Really Worth It? - by John Brockwell
Concerns regarding quality affect consumer choices. A Reuters/Zogby poll recently released on September 19 found that 78 percent of Americans worry about the safety of Chinese imports, and 25 percent have stopped buying food from China. In the poll, 35 percent of respondents were “very worried” and 43 percent were “somewhat worried” about the safety of Chinese goods. Not only must executives be concerned with the quality and reputation of their own products and brand, but now there are risks of being associated with a larger brand – “Made in China.” At a time when China has become the largest source of imports for the United States, company executives are evaluating their reliance on China-based suppliers. Though the government of China is working to improve their brand image by instituting and enforcing quality standards, it might not be enough to stave off buyers from reconsidering their sourcing decisions. International sourcing and procurement can have high rewards, but those rewards bring additional high risks.
Are the benefits of global sourcing really worth the challenge? Global sourcing can be a great tool to drive efficiency and help gain access to new markets. However, it is not a strategy to be undertaken with little thought and many assumptions. It’s important to analyze the role global sourcing plays in your organization’s overall strategic plan. Asking the right questions not only before making the sourcing decision, but also regularly throughout the life cycle of the transaction can help mitigate your risk and improve the odds that the answer for your sourcing question is “Yes.”
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