According to Sourcing Journal, a survey performed by accounting firm PwC found that the “vast majority (70 percent) intend to reduce their reliance on China.” Sourcing Journal reports:
PwC recently surveyed 40 leaders in two industry sectors— retail and branded products, and industrial products and services—and found that almost 95 percent intend to prioritize a diverse sourcing base over the next three to five years to reduce transit costs (92 percent) and counter geopolitical uncertainty (90 percent). Meanwhile, 40 percent say they prefer not to move more than 25 percent of sourcing dollar volume to a single country.
Respondents represent a variety of global companies, including Fortune 500 companies, that rely heavily on direct sourcing. The survey asked about their plans, strategic priorities and challenges for the year ahead. Here’s what they said.
The vast majority (70 percent) intend to reduce their reliance on China. Topping the list of reliable alternative sourcing locations is India, identified by 64 percent of executives, followed by Mexico (48 percent) and Vietnam (40 percent). Meanwhile, 50 percent are already working on a nearshoring strategy, with an additional 24 percent exploring nearshoring possibilities.
The companies with the most comprehensive sourcing needs—those spending more than $2 billion annually on sourcing—are pursuing the most aggressive diversification goals, with half planning to diversify more than 30 percent of their spend over the next five years.
More than 80 percent of the companies surveyed told us they’ve already moved sourcing volume to new geographic locations in the last two years. Of those, almost 90 percent have moved sourcing operations out of China and some 80 percent reported that they had been able to find cost-effective alternative locations.
While many companies still struggle with setting geographic diversification targets, clearly the majority are moving their supply bases while balancing surety of supply needs.
Read more here.
