Near-sourcing, or producing products closer to where they are ultimately sold, is growing in popularity. As more companies bring production closer to home, they’re putting a new twist on globalization, or in some cases, reversing it altogether. Kurt Salmon retail strategist Vinod Rangarajan discusses this increasingly popular trend and how retailers can make the most of it.
Q: What’s driving the increase in near-sourcing?
A: Several factors, the first being supply chain inflation. The cost of producing products in China has been steadily rising as labor rates increase. So the response of many retailers was to move to other Asian and Southeast Asian nations, like Bangladesh and Thailand. But transportation costs are also rising, spurred by higher oil prices. This drove some U.S.-based retailers to look for locations closer to home, like Central and South America.
Q: But there’s also a customer experience element to near-sourcing, right? [Read more…]