Executive Briefings

Near-Shoring Isn't as Straightforward as You Might Think

The production of high-tech goods has moved steadily from the United States to Asia over the last decade. But soaring oil prices, a falling dollar, and rising wages are undermining some of the reasons manufacturers moved offshore. For managers of global supply chains, the question now is whether or not to consider scaling back offshore production by returning operations to, or closer to, the United States. Although McKinsey analysis shows that for a number of high-tech products, costs have changed enough to undermine the benefits of Asian production significantly, the decision to rein back offshoring isn't straightforward. In rethinking your global supply chain, you must carefully evaluate the importance of speed, the availability of skilled talent, the potential for further productivity gains in Asia, one-time transition costs, the local import and tax implications, and organizational interfaces.
Source: McKinsey Quarterly, http://www.mckinseyquarterly.com

The production of high-tech goods has moved steadily from the United States to Asia over the last decade. But soaring oil prices, a falling dollar, and rising wages are undermining some of the reasons manufacturers moved offshore. For managers of global supply chains, the question now is whether or not to consider scaling back offshore production by returning operations to, or closer to, the United States. Although McKinsey analysis shows that for a number of high-tech products, costs have changed enough to undermine the benefits of Asian production significantly, the decision to rein back offshoring isn't straightforward. In rethinking your global supply chain, you must carefully evaluate the importance of speed, the availability of skilled talent, the potential for further productivity gains in Asia, one-time transition costs, the local import and tax implications, and organizational interfaces.
Source: McKinsey Quarterly, http://www.mckinseyquarterly.com