At the recent World Procurement Congress Tom Linton CPO Flextronics spoke about his top ten trends that are Influencing procurement. It was a fantastic way to open the event with some interesting content and concepts especially around non zero sum.
Here is a slidshare of the top trends Influencing procurement according to Tom Linton.
Here is the list of the top ten trends influencing Procurement
- Non Zero
- Corporate Social and Environmental
- Unpredictability becomes more predictable
- The Growth of Regional Local Sourcing
- Control Tower models replace traditional procurement functions
- Skill specialisation
- Raw material scarcity
- Global labour costs equalise
- Business process convergence
- Cloud computing
This is a recent interview on CNBC of Tom Linton talking about a set of changes occurring in his supply chain and the development of innovation centres.
CNBC Asia Interview with Tom Linton from Flextronics on Vimeo.
Tom says he sees a new regionalisation of manufacturing and that they are keen to make innovation boarder-less so that their customers can carry out their manufacturing where ever their end customers are. So Flextronics are looking to make ecosystems around their factories with suppliers and their end customers.
While Tom talks directly about innovation and shortening of supply chains my belief is that the core reason to bring manufacturing back to the US is because of rising prices, in China for example there is a 20% rise in costs year on year at the moment! This rise in rates was confirmed just before Christmas by Flextronics CEO Mike McNamara who said:
What you are seeing is you are seeing the cost in China go up 20% a year, and we would anticipate the cost in China to continue to go up 20% a year for the next five years. We have seen our rates in Malaysia go up about 30% this year.
So has this move been forced by market conditions or is it one that is truly developed with the supply chain and innovation in mind? I would love to hear your thoughts below.