Tuesday, September 25, 2012

Week 5 - "Reshoring"

“Reshoring” is a new trend within the manufacturing industry.  A MIT study found that 14% of U.S. companies are planning on-moving manufacturing capacity back to the U.S..  This growing trend is based on several factors.  Rising wages overseas are reducing some of the cost advantages of manufacturing in many markets.  Shipping cost are also rising further causing companies to question overseas manufacturing.  These are traditional cost concerns that companies look at.  However, the trend of “reshoring” is also based on factors that are not directly related to supply chain costs.  First, is protection of intellectual property.  Many countries that are typically strong in manufacturing do not have strong intellectual property protection laws.  U.S companies are also facing political and public pressure to move manufacturing back to the U.S..  These two factors are not supply chain or cost related yet they play an important role in companies decision making process.  “Reshoring” demonstrates that in a complex world decisions concerning supply chain management cannot be made solely on traditional factors like cost.   

Should cost be the only driver when evaluating supply chains?          

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