Would Your Sourcing Organization Know a “Carrot” or a “Stick” if It Saw One?

Much of the world’s footwear, apparel and fashion accessories are sourced from Asia, with production hugely dependent on relatively low-cost labor. Few industries have remained so untouched by advances in process technology, consequently much of what we wear or carry remains effectively hand made.

With production costs rising, companies have been chasing the next cheapest location, but the sheer volume is close to maxing out the available choices. Few new places exist with the scale to enable a real volume shift from China, Vietnam and Indonesia, except perhaps India. While India looks full of promise, companies are watching from the sidelines. Reform has stalled before.

Ironically, few have looked where the greatest gains can be won: in staying put, gaining a better understanding of what they actually buy and through that defining the way to handle suppliers.

In this article, Peter Hopper discusses why a fact-based procurement mindset is necessary for sourcing organizations that hope to improve their leverage.