Sourcing Innovation: Recent Comments

Comment on Having Problems with your Wireless Connection?

Ron Southard — Mon, 13 Feb 2012 16:27:50 GMT

Oh. I love the ear trumpet! Surgery?

Comment on The Case for Onshoring ... Is A Damn Good One!

Dick Locke — Mon, 06 Feb 2012 21:48:10 GMT

"He's a walking contradiction partly truth and partly fiction. That's from the Kris Kristofferson version of the song, not Green Day's. It applies to both Guy Morgan's comments and Harry Moser's organization reshorenow.org.

The true part is that low cost countries that are successful get more expensive. The fiction part isn't exactly fiction, but the underlying sources suffer from the common flaw of comparing global sourcing done badly to domestic sourcing done well.

Why, in the 21st century, would anyone consider buying from a supplier who can not produce adequate quality? Or whose integrity on IP issues you don't trust?

That's exactly what the "complete cost model" from Onshorenow assumes you are doing. It actually asks what percent of poor quality you expect. If the answer is above zero (or at the very least, above that for your current supplier) you will get in trouble and you shouldn't even consider the supplier's price.

From personal experience, I know that there was huge skepticism about low cost countries in the electronics industry years ago. It was overcome by rigorous landed cost modeling that clearly separated risk factors from cost factors followed by huge successes

Yes, it does take skills and (dare I mention it?) training to do an excellent job of global supplier selection. Companies that did it reaped benefits that those who did not invest in skill development did not realize.

Comment on Managing Indirect Spend: An In-Depth Review, Part II.1

Bill Dorn — Wed, 25 Jan 2012 13:24:46 GMT

Thanks for the continued in-depth review!

Comment on Reinventing Supply Management as the "Go-To" Organization

Rick Ankrum — Tue, 24 Jan 2012 13:49:28 GMT

If Supply Management is going to be the "Go to" resource then there must be something not available elsewhere. My experience at one company with the CEO confirms this. Our department was the only one that could provide data in a timely manner. He knew where to get the answers.

Rick Ankrum
eBook author
http://3mailat.com

Comment on Managing Indirect Spend: An In-Depth Review, Part I.3

Rick Ankrum — Tue, 24 Jan 2012 05:56:28 GMT

Change management and stakeholder involvement is important. In my efforts I try to get key stakeholders involved early and often.

Rick Ankrum
eBook author
http://3mailat.com

Comment on Five Steps to Long-Term Growth - Huh?

Brian McGuire — Mon, 23 Jan 2012 04:14:42 GMT

Nice post... I feel your passion and couldn't agree more. I'm sick and tired of Wall Street vultures riding our entire economy like a bunch of maniacal coked-up jockeys! It's time to tell those parasitic F***s to start working for a living!

Comment on A LOLCat Christmas Wish

Per Wendelboe Nielsen — Sat, 24 Dec 2011 11:05:06 GMT

Merry Christmas!

Let's just hope everything works out at the North Pole Demand Planning Center :)

Comment on Will 2012 Be The Year Manufacturing Returns to Mexico?

Bill — Tue, 20 Dec 2011 13:20:40 GMT

Over the last few years, We have seen a huge increase in client interest in near-shoring operations and pulling back from Asia to look at Mexico. In fact, we have been actively engaged by several universities in Mexico to speak on the topic this year alone and have helped develop best-practices for Mexican business owners to capture this piece of a developing market. In many cases, we were able to help our clients produce substantial savings by moving manufacturing closer to home, and at a minimum we were able to reduce supply chain disruptions and lead times. But, there certainly is a long way to go when it comes to price for many products.
I think the report by AlixPartners misses some critical components of the cost model in moving manufacturing to Mexico. The report assumes three things to support the break-even 2015 prediction: Labor rate increases, freight cost increases, and currency changes. It missed potentially the most important factor, raw material costs. For some products (think steel), NO ONE can compete with subsidized pricing from China. The three points listed in that report only help Mexican (and other low-cost country) businesses to gain back some ground in terms of pricing, but they simply cannot be competitive with some of the raw materials, which are often the bulk of the cost in a finished manufactured product. Mexico and the U.S., like many other countries, imposes anti-dumping laws on raw materials, so it is not simply a matter of buying raw or semi-finished products from overseas and having them finished in near-shore. Of course having a firm understanding of IMMEX and PITEX programs can help circumvent some of the cost issues, but our findings are that most businesses don’t have a clue where to begin, and are definitely not in a position (going solo) to shift business back locally by the estimated 2015 date in the report.

Comment on Will 2012 Be The Year Manufacturing Returns to Mexico?

Dick Locke — Mon, 19 Dec 2011 16:20:37 GMT

I'm startled and skeptical about the assertion (not yours, Alix Partners') that wage inflation in China is running 30% per year. Can anyone provide supporting documentation?

Paul Krugman had a line in this morning's NYTimes" "All economic statistics are best seen as a peculiarly boring form of science fiction." Could this be an example?

Comment on Key Takeaways from the UL Product MindSet Study, Part II

marc — Fri, 16 Dec 2011 23:44:46 GMT

You've got guts. And I wish there were more like you telling it like you see it.