Is it the End of the Sourcing Import Mindset?

I like what World Trade's Beil Shister has to say in a recent op/ed about the changing procurement and supply chain global tides. In the above-linked piece, Neil talks about the end of the Wal-Mart supply chain era -- a time that's been marked by the relentless drive to find cheaper markets to produce goods for export to the U.S. and Europe. Going forward, he suggests the possiblity of these "import-centric" supply chains ending in favor of "export-centric" ones. Pointing out that today, even before the full impact of the falling dollar is thankfully felt from an export perspective, "40% of the revenues of the S&P 500 companies are currently earned abroad," Neil nails home the point that labor arbitrage-based low cost country sourcing strategies will form only a small piece of the global sourcing and supply chain organization in the future.

In this regard, "If the supply chain of the Wal-Mart era was a command-and-control approach designed to deliver a finite number of standardized mass products at minimum cost, the post-Wal-Mart supply chain can be expected to operate on a more flexible scale with increased emphasis on customized products for differentiated markets." What does this mean for Spend Management? For one, success in this environment is going to require a heck of a lot more global and general business awareness at all levels of the procurement and operations organization. And it will also require companies to change their procurement mindset from one of just reducing costs -- even total landed costs -- to one of balancing flexibility and agility with the need for sourcing results that trump the competition, both around the corner and around the globe.

Jason Busch

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