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Procurement Trends: From Outsourcing to Near Sourcing
It wasn’t so long ago that procurement professionals automatically sourced many parts and components (and products) from China without a second thought. “It’s always cheaper in China” as an operating philosophy prevailed until recent events and changing circumstances called that approach into question:Highly publicized quality issues caused great harm to company reputations and customer confidenceRising labor rates in China (20% per year) have lessened the cost advantageRising and unpredictable oil prices make transportation costs a more critical concernHigh inventory requirements and long lead times are a challenge in light of shrinking product cycles and increasing demand volatilityCompanies are becoming more aware of the risk and cost of supply chain disruptions
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