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Politics : Rat's Nest - Chronicles of Collapse
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From: Mannie10/5/2009 6:22:34 PM
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The Short Tail: Near-Sourcing Trends Create New Winners and Losers in the Supply Chain

By Benjamin Gordon, Special Contributor -- Supply Chain Management Review, 10/1/2009 7:26:00 AM

The move toward “near-sourcing” is underway. Car manufacturer Tesla Motors just canceled plans to manufacture its 1,000 pound batteries in Thailand as previously planned. By manufacturing them closer to Tesla’s home base in California, it will decrease the shipping distance of each battery approximately 5,000 miles. Other major manufacturers are following suit.

Also called “reverse globalization” or “shortening the supply chain,” near-sourcing describes the return of American manufacturing in order to decrease shipping expenses. As freight costs remain high, globalization has become less competitive and is expected to remain so for the foreseeable future. We will share why near-sourcing is happening, discuss implications for the supply chain industry, and conclude by offering ideas to supply chain business owners to ensure their success amidst change.

Near-Sourcing: Requiem for Globalization?

Historically, cheap gas fueled globalization. It enabled companies from all over the world to shop globally for cost-saving business solutions. However, fuel costs have nearly doubled since January of 2006, and have shot up by nearly six times in the past six years (see “Chart One”). In a recent CIBC World Markets Report, analyst Jeff Rubin estimates that the cost of transporting imported goods into the United States is now equivalent to a 9 percent tariff on imports. Companies will recalculate the costs and benefits of global outsourcing as the cost of energy is expected to remain high indefinitely.
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