Rising Energy Prices and Global Sourcing Don't Mix Well

It won't surprise many readers of this blog to learn that rising energy and oil costs are reducing the benefits of global sourcing, but it's worth asking the question, as Bob Ferrari recently did, if we've reached an inflection point in the energy/sourcing equation. In a post from earlier in the month, Bob states his belief "that this is just the beginning of fundamental structural changes that will occur in the interrelationships and flow of goods across global supply chains ... with increased speculation in world energy markets, an obvious imbalance in the global supply vs. demand for oil, and more predictions for increased global energy prices, it seems to me that we are quickly reaching a fundamental inflection point where supply chain business and global sourcing strategies are going to become structurally altered." While I don't think that we'll ever go back to a Spend Management environment focused just on local sourcing, I do believe we're about to enter a new era where global price equations don't necessarily make sense -- that is, unless the impact of rising global prices is simply inflated away (a scary, but not outlandish thought).

- Jason Busch

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