How Rules of Origin Really Do Make a Difference for Sourcing Practices
Supply chain pressures aren’t going away, and as you consider shifting your sourcing practices to manage the uncertainty, be sure to evaluate the origin of your products, including the inputs.
Sourcing Trends are Changing
All you have to do is look at the news to know there’s a massive change happening in global sourcing patterns. Many top-tier manufacturers and brands are either changing or diversifying their sourcing in response to changes in trade norms with China, as well as the uncertainty around Britain’s withdrawal from the European Union.
In the fashion and apparel sector, brands like Vera Bradley, Abercrombie & Fitch and Chico’s – to name a few – all plan to, or have already started to, diversify their sourcing portfolio.
The Tightrope of Risk and Cost
Sourcing patterns shift for many reasons, such as geo-political tensions, environmental changes, rising labor costs and tariffs. But they always shift because you’re trying to balance risk and cost.
As you find that balance, it’s critical to factor in all the elements that make up the cost of your finished goods. If you’re moving factories for lower labor costs to qualify for a free trade agreement or to avoid tariffs, considering every line item in the total landed cost in isolation may actually cost you more.
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