Sourcing Strategies: As Volatile as Your Regional Supply Chains

This afternoon, I'd like to welcome back a regular guest columnist to Spend Matters. Brian Sommer is a Senior Fellow at Azul Partners, founder of Tech Ventive, and is author of the blog Services Safari..

The June 2006 World Trade Magazine had a very nice, comprehensive look at the "Top 30 Countries for Trade and Expansion". The editors did a solid job of producing this piece. They used Aon Political Global Risk data, Economist Intelligence Unit data and information from a variety of governmental entities here in the U.S. and abroad.

According to the findings, Supplier Risk Management types should review:

- How much their firm is buying from each of these companies in different regions and assess whether these purchases are prudent given the risk/reward profile of each source. For example, Pakistan was ranked the highest risk firm within the Top 30. I know of a software firm in Texas that relies exclusively on a Pakistani form for all of its software development and product/customer support. Given the findings, they are vulnerable now and need to take steps to mitigate any potential disruption.

- Whether your key country sources are gaining or losing ground in these rankings. A country that is dropping in stature may be doing so do to number of factors that should be of concern to your firm. Likewise, countries which are overheating may become places with serious port and other transportation congestion problems. They could also experience rising wages/costs as their economy continues to expand.

In a review of the metals industry that I am trying to spearhead at a U.S. firm, supply risks are rapidly changing. In that industry, supplies of many metals (e.g., titanium) are extremely tight and quite expensive. As we enter into a new round of strategic planning, the focus of discussions has less to do with new customer acquisition and more on the identification of new sources of supply. The point of this is to remind all of us that risks are continuing to change daily in the global world we live in now. Supply strategies must be just as nimble.

Please evaluate the world you're buying from today. And, think about doing it again and again and again.

Brian Sommer authors the blog: Services Safari.

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