Universal Supply Chain Misconceptions or “Global Sourcing Lies”

In a recent Sourcing Journal Online article, Sourcing is Hard, Mike Todaro, managing director of the Americas Apparel Producers' Network, quotes Barbara Zeins, an industry expert that published a short list of “9 Big FAT Garment Lies,” which we might as well call “Global Sourcing Lies,” more generally. Her list of supply chain lies, which I’ll re-quote here, is nearly universal to all industries:

  • Vendors are substitutable
  • There is no cost in setting up a new vendor
  • Costs are linear, increasing in direct proportion to quantity produced
  • Last years performance is a good prediction of next year’s
  • People are a variable cost — in downturns, lay them off
  • Customization is always expensive
  • All costs are either fixed or variable
  • As long as you are competitively priced you will survive
  • The only way to lower product costs is cheaper labor or materials

Another way of looking at this list is as a checklist for global sourcing and category managers to have to answer to when they’re involved in a sourcing event or supply chain design effort – or even steady-state supplier management. Perhaps in certain markets, supplies really are substitutable. But we all know the true cost of switching suppliers and developing new ones across direct spend efforts – as well as how supplier development efforts can often yield exceptional results in new ideas and additional collaborative ways to take out cost.

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