Rethinking retail sourcing critical When many merchants find a retail sourcing strategy that works, they tend to stick with it until a problem develops or they are forced to find a new supplier. However, it can be beneficial for retailers to continually review their sourcing policies to ensure they are getting the most for their money and all operations are running smoothly. The retail supply chain can be complex, and it is essential for businesses to keep an eye on what new sourcing trends develop to ensure they don't miss out on the potential to make changes to their sourcing strategies and see cost saving results.

Low labor costs are one important thing a business often considers when beginning a search for a reliable and affordable supplier, but companies should keep an eye out for a number of other components when determining whether or not they should change up their suppliers and how they can better manage their sourcing. A company that determines it ought to procure products from one country purely because of the low labor costs may be overlooking other important aspects, such as shipping costs or logistical challenges, that could add up to be expensive in the long run.

What worked in the past may not work today
Companies that previously based their retail sourcing in emerging business hubs such as China may find that updating their sourcing could bring major cost savings. Many retailers are beginning to expand their sourcing horizons and looking to countries such as Cambodia, Vietnam, Pakistan, Egypt and Bolivia, among others. These countries have inexpensive labor markets, natural resources and governments that encourage development and manufacturing.

"Due to its success as an industrial nation, China is no longer automatically the cheapest sourcing location and companies looking only for the lowest cost are now looking at locations like India and Sri Lanka instead," said supply consultant Brian Templar, according to Retail Week.

Price one of many concerns
Retailers rethinking their sourcing strategies should consider price when searching for new suppliers, but they should also take other aspects into account as well. While a getting the best price is ideal, it may be more beneficial for companies to conduct their sourcing closer to home to avoid higher than expected shipping costs, or move their sourcing to countries that offer favorable business incentives, such as zero duty rates. While some retailers may not take these concerns into consideration initially, they can add up to be expensive.

Unexpected expenses may be one thing a business runs into when reconsidering its sourcing techniques, but it's also important to keep in mind location and potential logistical challenges. Companies that choose to procure products from suppliers located across the globe may not be able to receive in-demand products in a timely fashion and miss out on sales, and risk not being able to quickly ramp up or slow down production on a particular commodity. By considering aspects besides prices when developing a new sourcing strategy, a company could see a clearer picture of what exactly a certain sourcing strategy will entail and how it may help to slash expenses.

Environmental concerns are also motivating some companies to review their sourcing strategies in order to cut down on greenhouse gasses, use more sustainable technology or gain positive publicity and engage consumers with green practices. Taking sustainability into account can help businesses make new sourcing decisions whether they're seeking new suppliers for current products or hoping to expand their existing lines with new merchandise.
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