Supplier Location and Total Cost of Ownership

When suppliers are further away from customers and assembly plants, other costs increase too. Because lead-time increases, so do safety and buffer stock levels. As inventory needs increase, cash flow is reduced, requiring the need for additional working capital. Given that there are additional costs beyond unit price, the total cost of ownership needs to be considered before choosing a supplier and making a purchase. 

When sourcing globally, it should be recognized that hidden costs are prevalent. These costs include  

Foreign exchange rates diminishing sales and cost savings 

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