Global Sourcing

Limited domestic labor availability, high domestic labor costs, the domestic demand for a great variety of unique products, global communication systems availability, lower trade barriers, increasing sophistication and capability of international suppliers, and developing pockets of production expertise unique to specific world regions have all led to the need for all corporations to create global sourcing strategies. Global sourcing strategies have paid big dividends for a number of U.S. corporations. Nike, with 100% global sourcing is probably the best U.S. example.

Unfortunately, many U.S. companies have swung the pendulum too far toward global sourcing; overlooking the benefits of domestic sourcing including shorter in-transit times, lower transportation costs, lower inventory levels, and rapid and reliable communications. A balanced sourcing strategy employing an optimal mix of global and domestic sources based on total acquisition cost, global business strategy, risk optimization, and high-level sourcing policies should be in place.

Case Example

RightChain™ recently helped one of the world's largest aerospace companies develop a global sourcing platform to serve their business needs into the 2020s. The optimized platform is depicted below.

RightChain Sourcing Optimization for a Large Aerospace Company