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Are we going to see renaissance of sourcing from Central Europe?

Risks of procurement and supply chains from very far territories have been known for long. But because no major disruption ever happened, the hidden costs such as:

  • costs of packaging, which can endure longer distances and sea transport

  • change of delivery lots adjusted to transportation needs and costs

  • higher stocks, which will hit company accounting in a few years, when some are obsolete and there is no way to get rid of them other than scrapping

  • impossible to flexibly react on exceptional situations such as defective delivery

and many others could be easily overseen.

This is nothing new however. What is new is current situation, when many companies closed their production, because they haven't material supplies. A that is an impulse to think of return to sourcing from Central and Eastern Europe. I intentionally leave aside scenario when a huge corporation has no real alternative to China, because of capability to delivery the volumes (such as Apple), this scenario is not relevant to most of businesses.

There is one more fact playing in favor - automation has strongly advanced in the last couple of years. Contrary to situation ca. 10 years ago, when Western European companies started to move production from CEE much further east. But if just a part of production returns back to CEE, the combination of large volumes and partial automation, can make CEE deliveries attractive again for companies e.g. from UK, Germany or Switzerland.

What will be the reality remains yet to be seen. But it is also in your hands, procurement colleagues.

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