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Shifting Sourcing Strategies Drive Supply Chain Change in Asia

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Mr. Roques
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Supply Network Guru
re:
Mr. Roques   12/8/2011 11:01:56 AM
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But when China becomes too expensive for US companies to order components from, where can they go? That's the tendecy, although we are a few years from someone even mentioning it.

They need to constantly move the supply chain from place to place, in order to keep prices down.

stochastic excursion
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Stock Keeper
re:
stochastic excursion   11/14/2011 7:42:54 PM
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Part of the business is going to emerging economies, but this is probably limited to component manufacturers.  The idea, I think, is that increased trade caused by investment from the West has created a critical amount of local capital.  Ideally this would fill in the gaps left by companies that have stopped doing business in China and Japan.

Mr. Roques
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re:
Mr. Roques   11/14/2011 5:00:42 PM
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What will happen with countries that are hosting many of the industries and that are raising wages, etc which end up raising costs? Will original companies end up moving to a then-emerging market? What will the old ones do? Are they supposed to be ready to innovate enough so that they can create products and not depend on US companies?

 

DennisQ
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Supply Network Guru
Re: Interesting Stuff!
DennisQ   11/10/2011 1:41:12 PM
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@Adeniji, there's certainly costs associated with moving to another location and of course there's the loss of the time necessary to move out of the region, but in many cases operations within Thailand will have to be essentially rebuilt from scratch anyway, and even if that's not the case there's no guarantee that flooding won't cause the same problems next year.

So rather than re-investing in a potentially lost cause, it may make much more sense to cut their losses and abandon ship.

jbond
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re:
jbond   11/10/2011 7:38:04 AM
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It will be interesting to see how many companies make shifts due to many uncertainties in the Asian region. Companies cannot just pack up and leave without losing millions of dollars and lost time. Finding alternative ways to ship things should help alleviate some issues.

Adeniji Kayode
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Production Synthesizer
Re: Interesting Stuff!
Adeniji Kayode   11/10/2011 4:22:28 AM
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@DennisQ, you are right, bearing in mind the impact of the disaster, its really a great negative impact on the economy and manufacturing, the tendency of manufaacturers moving to another location is very high to avoid future occurence, but then what about the cost of setting up in a new location, this will take time and capital.

saranyatil
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Supply Network Guru
Re: Interesting Stuff!
saranyatil   11/10/2011 2:12:12 AM
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DeenisQ,

Situations in Thailand is getting worst with evryday. I was just interacting with my client in Thailand he syas Honda factory is completely sunk and no productions are taking place.

Many fabs have been completely closed and Japan has still not completely recovered.

Places like India, Hong kong, china etc looks a little safe because it is not vulnerable for any natural calamities like other asian countries. Looking forward to see where sourcing will emerge next .

DennisQ
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Supply Network Guru
Interesting Stuff!
DennisQ   11/9/2011 2:14:40 PM
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Thanks for linking to this, Carla! Interesting stuff.

But given the current situation in Thailand... well, I'm sure that will have an impact on the sourcing strategies of many, as the situation doesn't exactly look like it'll be all fine and back to normal anytime soon.

Anyhow, it'll be interesting to see what happens in the APAC region in the next 6-12 months. I do very much hope the flood issues are largely resolved, of course, but unfortunately I do believe the long-term realization that flooding is always going to be an issue will noticeably slow the growth of high-tech in Thailand. I would not be surprised at all to see at least one of the major players there refuse to rebuild and move elsewhere.



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