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Navigating Risk Management in Global Sourcing: Strategies for Financial Executives

Join industry leaders at the Risk Management for Global Sourcing conference in Chicago on May 13, 2008. CFO Don Munchrath from Carlson will explore key drivers shaping global sourcing, including market reactions, supplier diversification, and evolving distribution paradigms. We will cover historical trends in foreign supply, from the 1980s to today, noting lessons learned and best practices for senior financial executives. Discover effective risk management resources and strategies to enhance your global sourcing decisions.

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Navigating Risk Management in Global Sourcing: Strategies for Financial Executives

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Presentation Transcript

  1. Risk Management for Global Sourcing NAW Large Company Financial Executives Networking Conference May 13, 2008 – Chicago, IL Don Munchrath, CFO

  2. Global Sourcing Drivers for Carlson • Reaction to market factors • Emergence of generic alternatives to proprietary fasteners • Need for supplier diversification • Cost advantages • Paradigm changes in wholesale distribution – strategic supply vs. “peddler”

  3. Chronology of Foreign Supply • 1980’s • Limited • A few direct relationships • Foreign JVs connected to US manufacturers • Collective efforts through industry groups

  4. Chronology of Foreign Supply • 1990’s • Emergence as a strategy • Need for consistency & predictability • Broker partnerships • A few key direct relationships

  5. Chronology of Foreign Supply • 2000’s • Need for direct relationships • Self-education & commitment to “row our own boat” • False start in 2004 due to steel shortages • 2005-2007 price advantages of foreign supply create disruptive opportunities • All out efforts throughout 2007/2008 to locate and partner directly with foreign suppliers • Laufer relationship

  6. Current Portfolio • 600-1,000 containers from outside the U.S. • $15 to $25 million (~20%) • Primarily collated fasteners but also • Steel strap • Bulk nails

  7. Resources to Manage Risk • Background checks & other intel • Face-to-face due diligence • Domestic insurance coverage • Hired logistical expertise • NOT: • supplier agreements • indemnity clauses • supplier insurance coverage

  8. Logistical Services & Benefits • Load scheduling • Visibility on inbound loads • Information and expertise – tariffs, importation requirements • Flexibility • Potential cost advantages

  9. Lessons Learned • Packaging and presentation • Duties • Product quality • Necessity of foreign travel • Know who you’re dealing with • Credibility with suppliers • Uncovering globally unsophisticated suppliers

  10. Locating Suppliers • If products are familiar and/or commodity, not much different than domestic effort • Domestic and foreign trade shows • Foreign travel • More challenges if extensive communication/collaboration is required

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