Increasing global sourcing increases the lead-time and also inventory in the supply chain. Companies generally face challenges of obsolescence and difficulty to manage supply chain volatility. Hence there is tremendous pressure on logistics issues in global supply chain activities.
Logistics is more than a Total cost approach
Companies consider logistics more from a cost perspective companies seldom take a more serious approach or perspective towards logistics. Companies involved in global sourcing perform calculation of increased inventory cost and other logistics cost.
Inventory positioning for strategic advantage
Inventory plays a critical role in the supply chain. Most companies take inventory as a burden, however inventory can also be positioned for strategic advantage in global sourcing. Global sourcing typically goes for 20-40% cost savings and inventory cost increase is generally about 10-15%.For instance inventory increase should be used with other logistics strategy like coordinating with TPL for fast response, rationalisation of logistics facilities for strategic advantage etc...,
Rethink logistics coordination
There is a desperate need to change logistics coordination to take full advantage of global sourcing. Consider Walmart which is a pioneer in global sourcing, they have mastered strategies like cross docking as a means to reduce inventory in the supply chain and at the same time capitalise on global sourcing.
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