Essay about Reshoring 320Blue spr15

Submitted By Moe-Hamed
Words: 717
Pages: 3

Reshoring

3/23/15

Reshoring

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Agenda





Domestic/Global
Sourcing
Costs
Current activity

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Global vs. Domestic Sourcing


Global Sourcing


also called “off-shoring”



takes advantage of cheaper labor







prominent with products with easily defined standards higher fuel costs result in high transportation costs virtual teaming can result in culture clashes and misunderstandings…….

Copyright 2011 John Wiley & Sons, Inc.
3/23/15
Reshoring

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Global vs. Domestic Sourcing
Domestic Sourcing





reduces transportation costs



can monitor quality more closely



closer buyer-supplier relationships



the emphasis on sustainability and “green” has resulted in a push toward local sourcing

Copyright 2011 John Wiley & Sons, Inc.
3/23/15
Reshoring

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Outsourcing
Companies may outsource to:




access technical skills lower costs free themselves of doing non-core activities

Two Key Dimensions:
 Scope




degree of responsibility assigned to the supplier

Criticality


importance of the outsourced activities

Copyright 2011 John Wiley & Sons, Inc.
3/23/15
Reshoring

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Global Cost Forces







Often dictate global location decisions
Costs of cheaper unskilled labor more than offset by the increase in other costs associated with operating facilities in remote locations.
In some cases cheaper labor is sufficient justification for overseas manufacturing.
Other global cost forces have become more significant ….

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The Sourcing Decision
Sourcing decisions are high-level, often strategic decisions that address:
 Which will use resources within the firm
 Which will be provided by supply chain partners




Insourcing –
The use of resources within the firm to provide products or services
Outsourcing –
The use of supply chain partners to provide products or services

Reshoring

Make or Buy
Decision
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Advantages and Disadvantages of
Insourcing
Advantages








High degree of control
Ability to oversee the entire program
Economies of scale and/or scope
Shorter lead times
Better forecasting

Reshoring
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Disadvantages







Required strategic flexibility Required high investment
Higher labor costs
Potential unionization
Loss of access to superior products and services offered by potential suppliers 8

Advantages and Disadvantages of
Outsourcing
Advantages





High strategic flexibility
Low investment risk
Improved cash flow
Access to state-of-the-art products and services

Disadvantages











Reshoring
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Possibility of choosing a bad supplier Loss of control over the process and core technologies
Added mgt attention
Transportation and travel costs
Taxation & currency
Communication and coordination challenges
“Hollowing out” of the corporation 9

Total Cost Analysis
A process by which a firm seeks to identify and quantify all of the major costs associated with various sourcing options
• Direct costs –
Costs that are tied directly to the level of operations or supply chain activities

• Indirect costs –
Costs that are not tied directly to the level of operations or supply chain activity
Reshoring

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Insourcing and Outsourcing Costs
Insourcing

Reshoring
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