Episode 8 – What to expect in global sourcing market in the end of 2024

This episode is AI-generated audio. The transcript has been lightly edited for readability.

Global Sourcing Trends and the Shift in Focus

Welcome back everybody for another deep dive. Um, today we are going to be talking about global sourcing trends. And specifically, we're going to be looking at what's happening in Vietnam and why that matters to you as a business owner or someone who is interested in this kind of thing. We've got some really interesting articles that we're going to be unpacking today. And one of them is all about the trends to watch out for in this market. So get ready to discover some really surprising facts and some game-changing insights.

Yeah, what I think is really interesting is that businesses are changing how they're thinking about sourcing. You know, it's not just about finding the cheapest supplier anymore, it's really all about building a supply chain that is resilient and sustainable and powered by technology. And Vietnam, I think, is becoming a real leader in this new way of doing things.

Yeah, for sure. So let's start by getting a sense of the global sourcing landscape. Like, what has it been like lately? It's been a little bit of a wild ride, hasn't it?

Oh yeah, absolutely. I mean, it's like trying to navigate a roller coaster in the dark with all the stuff that's been happening recently. You know, things like the conflict in Ukraine and the US elections coming up, they're really throwing a wrench in the works and making it hard for businesses to know how to plan their sourcing. You know, in fact, 62% of businesses are saying they expect even more disruptions to their supply chains because of all this geopolitical stuff.

Yeah, I mean, that's a huge number, right? And, you know, imagine you're a company trying to get, let's say, electronic components for a new gadget you're making and then suddenly your supplier in, you know, some conflict zone is like out of the picture.

It's a real pain.

Totally. And that's why, you know, having different options is becoming so important. Companies can't just rely on one source anymore. They need backups. And that's where Vietnam, I think, is looking really good.

The Shift Away From China

So then let's talk about China a little bit. It's obviously still a giant in the sourcing world. But, you know, we're hearing things that maybe things are changing. So what's the deal with China?

Well, yeah. I mean, China is definitely still a major player, there's no question about that. But, you know, we're starting to see some shifts. For example, the demand from emerging markets is keeping Chinese factories pretty busy. But at the same time, US buyers are getting a little bit more hesitant. You know, inspections of goods coming from China by US companies have only gone up by 13% this year.

I mean, 13% might sound like a lot, but when you look at how much global trade has grown overall, it's actually not that much. So it kind of makes you think.

Yeah, it sounds like maybe US companies are starting to look beyond China for their sourcing needs.

Yeah, exactly. And that shift away from China creates a good opportunity for other countries to step up. And Vietnam, with its growing manufacturing sector, is in a great position to benefit from that. I mean, think about things like electronics and textiles. Vietnam is already doing really well in these areas, and I think they could see even more growth as companies look for different places to source from.

That makes a lot of sense.

The Rising Importance of Sustainability

Now I want to talk about something that I think is super important, and that is sustainability. You know, it's not just some trendy word anymore. It's something that businesses really need to care about.

Oh, absolutely. Sustainability is not optional anymore. It's like a must-have. I mean, a study came out recently and it said that something like 70% of businesses now look at things like environmental and social factors and governance when they're deciding who to source from. And you know, it's not just about doing the right thing. It's also about what consumers want and what investors are looking for. They want to see companies doing good while they're doing business.

Exactly. You know, consumers are paying attention to where their products come from and how they're made. And investors are putting their money into companies that are trying to make a positive impact.

And this is another area where Vietnam has a bit of an edge. They've really been working hard to become more environmentally friendly in their manufacturing. For example, they're investing a lot in renewable energy and promoting sustainable practices across different industries. So that makes them really appealing to companies who want to build a supply chain that's ethical and responsible.

Yeah, that's really smart. So it sounds like Vietnam is checking all the boxes here: diversification, sustainability, a growing manufacturing sector. But, you know, we can't ignore the elephant in the room here. Inflation is a real thing that's affecting everyone. So how does that play into all of this with sourcing?

Inflation is a big concern for sure. I mean, it's putting pressure on companies to find sourcing partners who can offer competitive prices without compromising quality or reliability. They have to be strategic about it.

So does Vietnam kind of offer that sweet spot of good prices and good quality?

Well, that's the interesting thing about Vietnam is that they seem to have found a really nice balance. Their costs are still relatively good compared to some other manufacturing hubs, and they've also been investing a lot in things like infrastructure and training their workforce. Which means that Vietnamese suppliers are getting better and better at making high-quality products. So that's great news for companies who are looking for reliable partners and want to diversify their sourcing.

Technology in Sourcing: Blockchain and AI

Now, before we get into some specific examples of how companies are actually sourcing successfully from Vietnam, let's talk a little bit about the role of technology in all of this. Because you know, yeah... technology, it's like all the world right now. It's really changing everything about sourcing. And it's not just a fad, I think. I mean, we hear all these buzzwords like blockchain and artificial intelligence. But are these really game changers or are they just, you know, hype?

Oh, they are definitely changing the game. I mean, they're bringing a level of transparency and efficiency to supply chains that we've never seen before. You know, like take blockchain, for example. So with blockchain, you can imagine you're a company that's sourcing coffee beans from Vietnam, right? In the past, it was really hard to know where those beans were coming from and what happened to them along the way. It was like this big mystery. But with blockchain, everything changes.

So it's like blockchain creates a digital trail for every step of the way.

Exactly. It's like a digital record of every transaction from the moment the coffee beans are harvested to when they reach your warehouse. So you can track the whole journey, see where the beans came from, check if they meet your quality standards, and even make sure that everyone involved was treated fairly.

Wow, that's amazing. Yeah, it must be such a relief for companies who want to be ethical and sustainable.

Oh yeah, for sure. And it's not just blockchain that's making a difference. Artificial intelligence is also playing a big role in all of this. You know, AI can analyze huge amounts of data, like shipping routes, weather patterns, historical demand, all sorts of things to help companies make smarter decisions about their sourcing. So instead of just guessing or using old spreadsheets, companies can use AI to really understand what's going on and make better choices about when to order, how much to order, and who to work with.

Exactly. It's like having a super smart sourcing assistant who can crunch all the numbers and tell you what's going to happen next so you can avoid problems and get the most out of your budget. This all sounds really cool, but I'm curious, is everyone in the sourcing world actually using these technologies yet, or are some people still kind of hesitant?

Well, here's the thing. I think that by the end of 2024, any company that hasn't started using these technologies is going to be way behind. It's not really a question of "if" anymore. It's more like "when." The companies who invest in these innovations are going to be the ones who succeed in the long run.

So it's not just about finding the cheapest supplier anymore. It's about finding the smartest and most sustainable and tech-savvy partners.

You got it. And this brings us back to Vietnam. You know, they're really putting a lot of effort into developing their tech infrastructure, which makes them even more attractive to companies who are looking for partners who are thinking ahead.

Vietnam Direct Sourcing and Finding Partners

Speaking of finding the right partners, you know, in our outline we mentioned this organization called Vietnam Direct Sourcing. Can you tell us a little bit more about them and what they do?

Oh yeah, they're a great resource for companies who are interested in sourcing from Vietnam. They basically help companies find and connect with reliable suppliers over there. They're like a bridge between businesses who need quality products and Vietnamese suppliers who can meet those needs.

So it's kind of like a matchmaking service for sourcing.

Uh-huh, yeah, you could say that. They take all the guesswork out of finding the right supplier. You know, like let's say you're a furniture company and you need high-quality, sustainable timber from Vietnam. Well, Vietnam Direct Sourcing can help you find suppliers who can provide exactly what you need while also making sure that everything is ethical and sustainable.

That's awesome. Especially for companies who are new to sourcing from Vietnam, it must make things so much easier.

It definitely does. And it really shows that sourcing from Vietnam isn't just about finding cheaper options. It's about finding a partner who can help you build a better, stronger, more sustainable supply chain.

Challenges and Due Diligence

That's a really good point. We've covered so much today, you know, from all the crazy changes happening in global sourcing to how technology is transforming everything. But let's get real for a second. Sourcing, no matter where you do it, always has its challenges. So what are some things that businesses need to be aware of when they're thinking about Vietnam?

That's a great question. One thing that comes to mind is cultural differences. You know, it's really important to build good relationships with Vietnamese suppliers. And that means understanding their culture and how they do business.

So it's not just about signing contracts, it's about building trust and understanding.

Exactly. It's about creating real partnerships. And it's also crucial to do your research, you know, really vetting potential suppliers to make sure they meet your standards, have a good track record, and share your values on things like sustainability and ethical labor practices.

So it's about finding the right fit, a partner who's on the same page as you.

Exactly. And luckily, there are resources out there to help businesses with all of this. You know, organizations like Vietnam Direct Sourcing can offer valuable insights and guidance to make sure that the sourcing experience goes smoothly.

Final Thoughts on the Global Shift

It sounds like sourcing from Vietnam is about so much more than just finding low prices. It's about tapping into this whole dynamic market that offers quality, sustainability, and a really forward-thinking approach to manufacturing.

I think that's a great way to put it. It's about seeing the bigger picture and understanding how Vietnam can be a strategic partner in helping you build a supply chain that's stronger and more responsible and more resilient.

As we start to wrap up this deep dive, I'm curious to hear your final thoughts. What's the most important takeaway that you want our listeners to remember from this conversation about sourcing in Vietnam?

You know, I think what's really amazing is that we're seeing this big shift in how people think about sourcing globally. It's not just about chasing the lowest cost anymore. Companies are realizing that resilience and sustainability and technology, those are the things that really matter if you want to be successful in today's world.

It's about thinking ahead and understanding that your sourcing decisions have a bigger impact than just your profits.

Exactly. They impact communities and the environment and the future of the planet. And I think Vietnam is showing everyone how to do it right. They're proving that you can be competitive and sustainable and tech-savvy all at the same time.

Yeah, it's really inspiring. And it makes me wonder, you know, how will this shift in sourcing change the global economy in the future? What kind of unexpected things might happen as businesses start to prioritize these things like resilience and sustainability and technology?

That's a big question, isn't it? I mean, will we see a more balanced distribution of manufacturing power around the world? Will consumers be willing to pay more for products that are sourced ethically and transparently? Will new technologies lead to completely new ways of sourcing that we haven't even thought of yet? It's definitely an exciting time to be following all of this. There's so much potential for positive change.

And you know, we encourage all of our listeners to keep learning about this topic. We have tons of resources on our website and in our podcast series, including some really deep dives on sourcing in Vietnam specifically. So yeah, stay curious, stay informed, and keep exploring the world of global sourcing. It's full of surprises and challenges and opportunities. Wait until next time, keep those brains working.