Global Sourcing: What to Expect in 2010

  • By Josh Green
  • · December 17, 2009
  • ·

2009 has been a roller coaster year for those engaged in global trade.  We began the year in economic free fall and are ending the year with uncertainty about whether we’re recovering.  What will 2010 look like?  There are about as many opinions as there are economists.  I’ll stay away from guessing where the macroeconomy’s headed, but below are a few thoughts on what the global sourcing community can expect in 2010.

#1) You’ll have to do more with less

Just about every company has experienced layoffs, and sourcing teams across industries have gotten considerably smaller.  However, the responsibilities of the sourcing department have not shrunk commensurately.  Quite the opposite, in fact: sourcing departments have in most cases been tasked with doing more than ever before.  Unfortunately, this has created considerable stress for those fortunate enough to hold onto their jobs.  Fortunately, this stress is fostering quite a bit of innovation, as people are forced to do more with less.  Even if the economy recovers in 2010, companies are going to be hesitant to scale teams up again, meaning that sourcing departments will need to continue doing more with less.

#2) Risk management will continue to top your agenda

With the implosion of supply chains in 2009, sourcing executives found themselves struggling to develop sensible approaches to risk management.  In truth, these efforts were long overdue.  For years, companies had focused too much on managing sourcing costs, and too little on managing sourcing risks.  Most executives I talk to are still not satisfied with their risk management infrastructure — and are aware that there are a wide variety of sourcing risks regardless of the trajectory of the macroeconomy — so risk management will continue to be an area where companies invest in 2010.

#3) Product safety will be back in the headlines

Speaking of risk, remember all those headlines about tainted imports (toxic petfood, tainted toothpaste, lead-painted toys, etc.)?  They largely disappeared in 2009, but not because we solved the import safety problem — but, rather, because the press had bigger stories to cover.  As the economy stabilizes, we can expect to see a renewed focus on product safety.  The recent Zhu Zhu Pet scare is likely a harbinger of this return to a pre-2009 environment.

#4) Socially responsible sourcing will regain momentum

Prior to the Great Recession, the global sourcing community was making significant progress in creating, promulgating, and enforcing socially responsible manufacturing practices.  In 2009, social responsibility seemed to fall off the radar screen, as companies focused on survival.  (There were notable exceptions — see Walmart’s announcement of a Sustainable Products Index.)  Again, as the economy stabilizes, we’ll see a return to a pre-2009 environment, with companies looking to impress consumers with socially responsible behavior.

#5) Sourcing outside of China will again be en vogue

In 2008, a great many sourcing executives were talking about the need to source beyond China.  Prices were rising in coastal China, and who wants to have all their eggs in one basket?  But, here again, the Great Recession intervened, and in 2009 companies scrambled to push enough business to their existing factories to keep those factories viable — diversification of sources was off the table.  However, I am again hearing executives talk about the dangers of being too beholden to China — and the need to have a “China+1″ sourcing strategy.

So that’s what we expect to see in 2010.  A mix of a 2009 hangover and a return to a 2008 state of mind.  What do you expect to see?  Would love to hear your thoughts here or via email: josh+crystalball@panjiva.com.

Happy Holidays!

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