When companies shouldn't outsource manufacturing

An excerpt from an article in Industry Week, by Jeff Wallingford, vice president, Supply Chain Strategy, Riverwood Solutions.

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The trend to outsource manufacturing has been going strong for two decades. Recently, it has been popular to speculate on whether this trend has gone too far... There are still many cases where a company may benefit by choosing in-house manufacturing over outsourcing - but only when these cases truly apply:

• a company's manufacturing process is the source of its competitive advantage
• a firm does something in a unique way and does not want competitors to know how to do it
• a competitive market for the specific manufacturing service does not exist
• there is no opportunity for the service provider to leverage their fixed capital, common overhead, specific purchasing power, or expertise
• to capture a limited and critical resource or channel
• it is too costly to outsource the manufacturing process because of the additional costs driven by outsourcing

Click here to read the full article.

The disappearing of exports

An opinion piece in the New York Times explores and compares the world of a politician and that of the CEO. Politicians see the world as dominated by voter geography, while CEOs see the world as a global supply chain where anything can be sourced, made and sold.

The author, Thomas Friedman, quotes a Hong Kong manufacturer who says, “Source everywhere, manufacture everywhere, sell everywhere. The whole notion of an ‘export’ is really disappearing.”

But until we vote a one global community, the tension will still exist. So the focus of our elected officials is as key enablers; immigration for the skills, protection of ideas, funding research and provision of logistical infrastructure.

Freidman also alludes to the long-term debt problems of the US, which is not enabled by the four year election cycle. One way around this may be a long-term (longer than four years anyway), bi-partisan, debt-reduction strategy committee - my 2 cents worth, not Freidman's. That is, only if debt-reduction strategy is an important goal for governments.

Click here to read the full article.