Made in the U.S.: Overwhelming majority of U.S. companies still source goods from U.S. suppliers

-- Manufacturing Business Technology, 11/15/2007 12:13:00 PM

Centric Software says results of its recent global sourcing survey verify that 92 percent of companies polled still source private-label goods from U.S. manufacturers. The survey says 65 percent of retailers and wholesalers source more than 50 percent of private-label goods from the U.S., with China as the next most commonly used region, followed by Southeast Asia and Mexico at 14 percent. The majority of respondents—66%—say they source private-label goods from two or three regions.

Product sourcing seems widespread, with 76 percent of companies currently sourcing goods and another 19 percent considering it for the future. Trends indicate that companies will offer more private-label goods in the future. According to the survey, an average of 30 percent of goods are private-labeled today, and respondents anticipate private labeling to reach about 42 percent of their product mix by 2010.

Large companies tend to source products more often than small companies, with the study finding more than one-third of organizations with $1 billion-plus in revenue source as much as 75 percent of their goods. Comparatively, the majority of respondents from companies with under $100 million in revenue source less than half of their private-label goods.

The types of goods sourced vary widely and include both high and low-value products as well as hard and soft goods.

Many companies are tracking operational metrics related to product sourcing, but not key risk metrics such as factory audits. Most companies—85 percent—track delivery date variance per shipment, but only 29 percent track factory audits and none measure code of conduct status.

"As companies rely on private labeling for a larger percentage of their revenue mix, they increase their exposure to risk from supplier irregularities," says Chris Groves, president and CEO of Centric Software. "This study shows that specialized tools will help companies track the profitability and measure the risks associated with private-label sourcing. Centric developed and launched its Product Sourcing application to ensure that companies achieve the maximum margin benefit with the minimum level of supplier risk."

The Centric Product Sourcing application allows retailers and manufacturers to identify and compare products and suppliers; collaborate globally through a secure, Web-based interface; track status of new sourced products through interactive dashboards; and assess financial metrics such as cost-to-deliver and margins. The application delivers real-time product intelligence by automatically combining metrics entered directly into the system with live information collected from suppliers' and in-house repositories such as product databases, ERP systems, email, and documents. Centric Product Sourcing allows retailers, manufacturers, and wholesalers to optimize the introduction of products, which in turn increases sales and profit margins

To download a summary of the survey, visit http://www.centricsoftware.com/default.aspurl=literature_library&section=whitepapers&id=17&oid=74

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