My father, when sizing up global matters over a martini or two, used to say "the pendulum always swings back."
I think of that when we discuss the nature of outsourcing and offshoring today. For years, the pendulum swung to the side of the argument that embraced key benefits:
Labor-cost reduction
Proximity to emerging markets
Occasional tax or currency benefits
Now, the pendulum swings back the other way, at least partly. Bolaji Ojo pointed this out several weeks back when describing the insights he got from the famous McKinsey report. (See: Why Manufacturing Matters & Where Best to Do It.) He wrote:
Until I read the McKinsey report, I had been wondering if I wasn't mistaken in disagreeing with the massive, decades-long transfer -- or outsourcing, if you prefer -- of Western production activities to the Far East and Easter Europe.
Another data point
Then there was Gary Pisano's articulation nearly four years ago, in which he argued that the further away manufacturing is from R&D, the more difficult it is to stay competitive. That's because designers can learn best from peeking over the shoulders of their manufacturing counterparts to see what's working and what isn't on the line.
Where's the pendulum today? Avnet Velocity vice president and EBN community member Wade McDaniel is going to give us a clear sense for that Tuesday morning (February 19, 8:00 a.m. PT). That's when he'll present his view of the state of outsourcing during a 60-minute webinar that I'll host.
McDaniel, a 25-year supply chain veteran, has an excellent perch from which to offer his assessment. I hope you join us Tuesday. Here's a link to the webinar information.
In the meantime, what's your take? Where is the pendulum on the outsourcing offshoring clock?
You probably know better. This is your strong topic, not mine. I didn't say that the peseta would be valued as same as the euro. I just said it would be expensive for Spain to change currency again now. Also, it's like giving a step back. And what if it doesn't work? Should they come back to the euro or what?
A change of currency would be expensive as well as unfruitful. The allocation of resources would be a problem and so would be surviving without the help of the European giants.
I think coming out the Euro would be their worst mistake. If they come out they will have nobody to save them. If they cannot perform well with the Euro what guarantee do they have that would perform well on an independent currency?
Is it only Europe that is being bogged down by countries that are having difficulties? Or is it a worldwide trend where the giants are bailing out smaller countries?
Ashish, I hear you. However, the complex situation in the Eurozone as you're aware is not about the single currency alone. Each countries e.g. Greece, Spain etc. have its own peculiarities and at the same time share challenges of dealing with the consequences of sustained large deficits and a protracted banking crisis. I think what is needed is an overall effective plan for European economic governance. The tools are readily available. Europe has the capacity to fix the Eurozone, if all the leaders can work together.
The companies shall not reward individual managers or product teams to make decision on outsourcing. Instead it should be a centralized team should make decision on what needs to be outsourced. This makes the organization successful and sustainable in the long term.
@Ashish: This is precisely what other Euro members have been telling Spain to do. And since they're the ones funding Spain's debts, they do have the right to dicate policies.
If Spain does abandon the Euro and move to the Peseta;the Biggest advantage they will have is that they can inflate and devalue their massive Debt Burdens instantly[Held primarily by German and French Banks].
Of course they would have to resort to Capital Controls (like in Iceland) initially but teh Economy would actually recover much faster and start booming.
What you are making the mistake of thinking that the New Currency will be valued the Same as the Euro.
It won't.
It will probably end up as 0.5 Euro.
That will make a massive change to Spain's current terrible Economic Predicament.
They will be entirely in control of their Own Economic Situation than having to Keep Begging Germany,Finland,Luxembourg and Holland for Loans.
A change of currency would be super expensive for Spain. That would be a bad allocation of resources. Instead, with that money they could solve some social issues.
I generally look for a 'follow the money' link. Since most western management are bonus'd based on quarterly or annual performance they will optimize those metrics. In tech (specially semiconductors) we know that a cutback in R&D will be disastrous some years later, perhaps as early as the next cycle, or the following one. If CEO et al bonuses, specially if heaviily weigheted with stock awards which can only be cashed 10-15 years after the award, we would see a more responsible set of decisions. Top management being rewarded on quarterly or annual perfromance is asinine. I can see a machine worker being so short-term linked, sales people too.
Outsourcing is not dead. But accounting for it must also be long-term. Once something is outsourced an organization starts diluting its jewels, and heads twoards hollowness, eventual 'death'.
Topping the list of the world’s biggest electronics distributors were Avnet and Arrow,followed by WPG Holdings, Future Electronics,
and WT Microelectronics.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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