Lean operations undermine “offshoring?”.

Some time ago I mused that perhaps the worm was slowing if not turning, in relation to local manufacturing, rather than buying in from China as the default option.

The crisis in the US, far worse than anything in this country, had to lead to structural change in the US economy, as the sort of structural change necessary usually only ever occurs when there is little option but to change, as continuing on is simply not an option.

It seems the swallows are appearing in the US, the early trendsetters are thinking twice about the downside of “offshoring”.  Loss of IP control, sovereign risk, long and inflexible supply chains, transaction costs in the supply chain and management, and so on.

It makes economic and social sense to manufacture amongst the network of services and capabilities required to be sustainably successful, rather than  taking the short term apparent cost reduction that really ends up costing more.

With China suffering increased inflationary pressure, their western export markets tightening wallets, an undervalued currency, and increasing domestic pressures around human rights, pollution, and the distribution of the new wealth,  something has to break, somewhere. Wise businesses appear to be weighing the costs and benefits of offshoring, Vs building local capability, considering the long term benefits of development of clusters of innovation and service providers, and lean operations including shortened supply chains, and coming to the conclusion that some things are better done locally.

It will take a long time for the tide to turn, and it will turn very selectively, as many commodity, low value, low technology items will always be cheaper from a low cost environment, but the manufacturing that adds real value will start to trickle home.

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
This entry was posted in Demand chains, Management, OE, Operations, Strategy and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s