Wait a Sec - There Are Things to Consider Before Deciding to Re-shore Operations
By: Supply Chain Digital April 04, 2014
The past couple of decades have been marked by a stream of organizations shifting operations abroad, lured by the promise of cheap labor and production. However, this dynamic is changing amidst rising costs and an increasingly complex global supply chain. Now, the trend is to at least consider re-shoring.
Today, many organizations face more challenges than they had perhaps bargained for in managing a trans-Continental or highly extended supply chain. On top of this, governments are increasingly offering incentives for manufacturers to return home. The UK government, for example, has ploughed £245m into its Advanced Manufacturing Supply Chain Initiative (AMSCI) as part of its “Re-shore UK” campaign.
However, organizations should learn from history and not run for the exit in a similar fashion to which they arrived. Offshoring can still be a highly profitable solution and organizations must ensure they have both quality data and the right processes in place before making any decisions.
It is important to decide whether you are optimizing the supply chain around cost, customer service, factory efficiency, a combination of all three, or some other parameter.
Plus you need to take account of your own position in the supply chain, recognizing the relative size and influence of different entities within it. A particularly powerful customer like a supermarket chain for example, will have a major influence on what you do, even if they are two or three tiers downstream,
Analysis shouldn’t be treated as a one-off event but a continuous process of monitoring and evaluation.