Lisa Reisman is middle markets editor of Spend Matters and our resident direct materials and global sourcing Spend Management expert. In full disclosure, Lisa is married to the editor of Spend Matters, Jason Busch.
I've often made presentations showing the "risks" of low cost country sourcing. These presentations contain pictures of containers sliding into harbors, cranes crashed, and cargo ships overturned. We add a few comments and the audience is always laughing. But today, when I saw this lead story on CNN showing the impact of the listing MSC Napoli near the shores of southwestern England, I had a very different feeling. I couldn't help but run a calculation that ran like this, "I'm a mid-sized manufacturer ordering one container a month of XYZ product and my container has gone overboard." For a mid to large sized company, this is certainly a hiccup but to a smaller firm that only orders a container a month, all sorts of problems ensue.
Risk management and scenario planning is not just for big firms. Firms of all sizes should have a contingency plan in place for precisely these types of disasters. Folks that source 80% of their requirements from low cost suppliers (often offshore) and 20% domestically are at a strategic advantage to firms that have made the shift to 100% offshore. I bet any manufacturer that has been sourcing offshore for 5 years or more has at least one “missing container story". Hopefully, none of you have any merchandize on this vessel.
Lisa Reisman is Managing Director and Co-Founder of the Direct Materials Sourcing Advisory Firm, Aptium Global.