The Other Side of Global Sourcing: Offset Requirements

For many, the drive to global sourcing comes primarily from the opportunity that South American, Central European, and Asian regions bring for cost reduction. But within the A&D world, cost is often a secondary factor -- at least further up the food chain -- in the move to global sourcing. In fact, offset requirements, which either mandate or suggest that a provider source a percentage of goods regionally for contracts, often drive the need to identify new sources of supply.

There's no better evidence of this in today's world than an article in India's Business Standard which notes that Boeing "sources $17 billion worth of goods and services from outside the United States and ... is exploring ways on how India can fit into the scheme of things on a long-term basis." Further, "to build a supply chain for its [Indian] programmes, Boeing is offering to inject new technology and process into the Indian industry." Fascinating stuff, but certainly Boeing will have to do the ITAR dance as it looks to grow its top line by working with the Indian armed forces and new Indian suppliers.

Jason Busch

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