Benefits of Insourcing & Reshoreing Production from China to the United States
Beni | Benefits of Insourcing & Reshoreing Production From China to The United States | | Patrick Bain, Stephen Parker, Daniel Walsh, & Rodolphe Gauthier | 12/11/2012 | |
Table of Contents Introduction 1 Operational Security 1 Intellectual Security 1 Network Security 2 Political Security 3 Quality 4 Length of the Supply Chain 4 Culture 5 Technological Differences 7 Society 8 Environment 8 Air pollution 8 Water pollution 9 Land Pollution 10 Economic 10 Macro-economic perspective 11 Micro-economic perspective 12 Total Cost 13 Transportation and fulfillment costs 13 Operational Security Costs 14 Quality Costs 15 Conclusion 16 Work Cited 18 Executive Summary
For over a decade, jobs have been endlessly shipped from the United States to other areas of the world in a tide of outsourcing. Drawn by the promise of cheap labor and reduced cost, China has received the bulk of outsourced manufacturing jobs from the United States. In a reversal of trends, some of these jobs are being reshored to the United States, and some new production is being insourced to domestic suppliers. The purpose of this paper is to examine the cause of this trend by uncovering the true effect on the cost of sourcing production from China. Traditional views of cost savings have primarily looked at labor cost and other costs directly associated to production. There are, however, other costs to consider including the security of operations, product quality, impact on society, and the total cost of doing business. All of these aspects clearly illustrate why many companies choose not to source production to China. Overall, the business environment in China can be caustic to profitability and presents several previously unseen challenges. The United States offers a much more stable and secure environment with much less risk and a higher margin for long term profitability. While outsourcing to China will still play a large role
Table of Contents Introduction 1 Operational Security 1 Intellectual Security 1 Network Security 2 Political Security 3 Quality 4 Length of the Supply Chain 4 Culture 5 Technological Differences 7 Society 8 Environment 8 Air pollution 8 Water pollution 9 Land Pollution 10 Economic 10 Macro-economic perspective 11 Micro-economic perspective 12 Total Cost 13 Transportation and fulfillment costs 13 Operational Security Costs 14 Quality Costs 15 Conclusion 16 Work Cited 18 Executive Summary
For over a decade, jobs have been endlessly shipped from the United States to other areas of the world in a tide of outsourcing. Drawn by the promise of cheap labor and reduced cost, China has received the bulk of outsourced manufacturing jobs from the United States. In a reversal of trends, some of these jobs are being reshored to the United States, and some new production is being insourced to domestic suppliers. The purpose of this paper is to examine the cause of this trend by uncovering the true effect on the cost of sourcing production from China. Traditional views of cost savings have primarily looked at labor cost and other costs directly associated to production. There are, however, other costs to consider including the security of operations, product quality, impact on society, and the total cost of doing business. All of these aspects clearly illustrate why many companies choose not to source production to China. Overall, the business environment in China can be caustic to profitability and presents several previously unseen challenges. The United States offers a much more stable and secure environment with much less risk and a higher margin for long term profitability. While outsourcing to China will still play a large role
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