Savings from global sourcing unclear to many firms

11 June 2008
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12 June 2008 | Jake Kanter

More than a fifth of firms do not know how much they expect to save from sourcing overseas. And a quarter of companies are not aware of the savings they actually achieved by buying globally.

A report, Global Sourcing: Shifting Strategies, carried out by PricewaterhouseCoopers (PwC), surveyed 59 retail firms based in eight countries. Although many companies were able to track "easier" costs such as logistics, customs fees and currency risks, they struggled to measure their spend on ensuring supplier compliance with environmental standards and product quality.

Carrie Yu, global retail and consumer leader at PwC, said in a statement: "The results show that while some companies have a robust process for reviewing and monitoring the benefits and savings arising from their global sourcing efforts, other companies are either not aware of the potential benefits or do not have the systems in place to track them."

Despite these problems with measurement, cost was considered to be the primary reason for global sourcing, with 73 per cent of the firms opting to buy products and raw materials overseas because of cheaper prices.

But quality of goods remained an issue with 90 per cent of firms saying it topped their list of concerns.


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