Much has changed in the world of supply chain over the last decade as global sourcing solutions have evolved.  The election of President Trump and the trade war with China have certainly contributed to instability within the global sourcing world. The factors influencing changes in sourcing are in the fine lines between customer satisfaction and trying to understand where the various markets are heading.  The companies that will win in 2020 are the companies that continue to adapt and stay ahead of current trends while internally evolving for the future.  Below are our professional opinions on what you can expect in the world of global sourcing for 2020:

Continued Uncertainty

With little direction in terms of timing on a trade deal with China, the repeal of the GSP with India and Tweets signaling that Vietnam may be next for tariffs has left many sourcing professionals continuing to scratch their heads.  This trend will certainly continue into 2020.  The pressure to ensure cost stability within the global supply chain will remain a high focus.

Localization

It’s no secret that many industrial manufacturers are looking at localization strategies for both high value and low value products going into this new decade.  Production Executives have moved into thinking that their supplier base should be more regional to their plants.  Therefore, sourcing professionals will spend more time looking for suppliers within designated regions for each of the manufacturing plants they have responsibility for. 

The Role of China

With the continued enactment of tariffs by the US, and no realistic end to the trade war between the US and China, companies will continue to move out of China even with the uncertainty of the next Tweet.  Corporations will continue to sink capital investment into other ASEAN countries and drive tariff mitigation and labor savings through their products.

Cost & Margin

With an estimated 2% overall US GDP growth expected in 2020, the goal is going to be continued cost reductions, while ensuring efficiency within the organization and supply chain.  In order to effectively manage these goals, supplier rationalization will be an important factor for 2020.  Companies will begin to focus on key suppliers and putting more work in their facilities while exiting on smaller or problem suppliers.

Supplier Relationships

Through all of the uncertainty in 2020, it’s going to be critical that supplier relationships are maintained and grown.  Given that global sourcing is currently being impacted with so much risk, threat, and uncertainty, strong personal relationships will be the thread that ensures integrity (and ease of sleep) in 2020.  Overseas offices or agents that manage these relationships can be ways to develop and maintain relationships.

It's important to note that while adapting to any new trend(s) in procurement and/or supply chain sourcing isn’t easy for most businesses, it will be the difference between your company's success or failure.

Component Sourcing International provides supply chain solutions for unique manufacturing challenges by lowering your costs and improving your productivity.  We give you both the peace of mind and confidence to know that your finished products will be of the utmost quality and at the best pricing the world has to offer.  To learn more about how CSI can act as your Global Sourcing Integrator, contact us today.

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