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Global Sourcing: Risks and Costs
Master the complexities to maximize the benefits
By Kim Biggar
Toria / Shutterstock. com
Nowadays, in much of the world, you’ d have to live a hermit’ s life to be unaware of the multitude of goods we consume that come from“ elsewhere.” While most people don’ t spend any time thinking about how those goods came to be in their possession, for supply chain professionals, securing those goods requires a lot of attention.
Sourcing products, materials, parts and services from suppliers around the world is a challenge: it involves significant risk, but also immense potential benefits. Clearly, manufacturers and distributors – as well as consumers – have found the challenge worth accepting; according to data from Statista, the value of the global outsourcing market grew from US $ 46 billion in 2000 to $ 89 billion in 2015, with a spike to $ 105 billion in 2014.
“ It’ s a big world,” said Angelo Crupi, a professor at Humber College in Toronto and coordinator of its supply chain management certificate program.“ Going beyond national borders helps companies access cheaper and better – and sometimes unique – services, materials and products.”
Grace Zhang, VP of business development at Strategic Global Sourcing Ltd.( SGS Sourcing) in Vancouver, sees global sourcing as“ an investigation business” that aims to reduce a company’ s purchasing costs, thereby increasing its competitiveness, and help it attain products that are not available in the local market or not available when required.
Lower-price and better-quality goods certainly have strong appeal, but do the risks associated with global sourcing outweigh those benefits?
SUPPLY CHAIN CANADA • QUARTER 4 2016 • 11