Global sourcing swings and roundabouts

According to KPMG's Global Manufacturing Outlook report, based on a survey of senior executives, 55 per cent of UK manufacturers currently have their primary sourcing relationship with a domestic supplier, but 41 per cent expect to have a more globally dispersed supply chain within the next two years, as they seek lower cost locations. Half of the businesses questioned for KPMG plan to increase their sourcing from the Indian subcontinent in the next two years, while 41 per cent expect to turn to China. Domestic suppliers are likely to lose out, as 36 per cent of UK businesses intend to reduce their sourcing from local suppliers during the same period, with 63 per cent citing cost as the explanation. Conversely half of all businesses which have sourced from developing economies believe that changing quality and cost considerations have made a shift back to sourcing from developed economies more viable. Some companies are thinking beyond sourcing locations for low cost alone and considering ways to align supply chains and their geography to other business model concerns, with 47 per cent of manufacturers moving to a model where suppliers are as close as possible to operations in order to reduce risk.