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Regionalization & the Future of Outsourcing

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electronics862
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Stock Keeper
Future of outsourcing
electronics862   11/30/2011 8:45:31 PM
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It is well known fact that the manufacturing costs a same product will vary the regional where it is coming from. It is mainly because cost of the product is function of several parameters like labor, raw material, electricity, transportation required to transfer raw material. These are basic reasons are which are causing regionalization.

TaimoorZ
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Supply Network Guru
Transportation costs
TaimoorZ   11/26/2011 5:17:55 AM
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In the case of bulky electronic equipment, the transportation cost of shipping the manufactured products may be very high. Companies may find it more profitable to ship raw materials to the other country and manufacture the final product there. I think this may be the reason why regionalization is increasing.

Kunmi
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Re: Rising cost
Kunmi   11/25/2011 8:09:32 PM
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If rising cost of labor is posing a challenge in China, then the fear of Quality product may be another and this may pose a challenge to the shareholders. Global economic challenges stand to be another thing that will affect the production level hence determining the cost of goods made and sold.

Kunmi
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Blogger
Re: Not sure about this
Kunmi   11/25/2011 7:52:02 PM
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Majority of us that want these manufacturing companies to come back home are in the consuming end. To the shareholders, as long as the returns are great, they will like it to stay off shore. Country's pride of having them at home is not paramont in the heart of the shareholders except they recieve certain level of acceptability that can make their investment yield as expected. We will continue to dream it and say it perhaps one day our dreams will come true. We absolutely need to minimize outsourcing and bring these jobs back to the country. Factors that may effect this change may be enormous but it is possible.

Hospice_Houngbo
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Supply Network Guru
Re: Not sure about this
Hospice_Houngbo   11/23/2011 12:56:46 PM
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"Saying people won't buy products made in China because people want to keep their jobs is being closed minded and not looking at the big world picture."

Actually, business rules are not as simple like that. A company is first accountable  to its shareholders, not to its country. But there is nothing wrong about people wish to see some of the oversea jobs come back home.

anandvy
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Supply Network Guru
Re: Not sure about this
anandvy   11/21/2011 6:14:50 AM
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Saying people won't buy products made in China because people want to keep their jobs is being closed minded and not looking at the big world picture.

@jbond, I totally agree with your observation. Globalization is the reality everyone has to live with irrespective of whether they like it or not. One good thing about globalization is there is global competition between companies which makes them to innovate to stay in the competition. Thus because of globalization some countries might gain, some countries might loose but in the end customer wins.

anandvy
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Supply Network Guru
Re : Regionalization & the Future of Outsourcing
anandvy   11/21/2011 6:02:38 AM
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The costs of Chinese labor, fuel, and transportation are all increasing faster than most expected.

@Jennifer, thanks for the post. I think inflation is bigger threat to not only china but to all the developing nations. For example in India also GDP growth has reduced drastically because of inflation. Weakening currency is one of the major reasons why inflation is so high in developing nations.

Jacob
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Supply Network Guru
Re: Not sure about this
Jacob   11/20/2011 10:47:19 PM
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1 saves

“Rising cost is a primary driver………….A second driver is increasing global risk”

Jennifer, yes the labour cost is increasing in China and this makes a second thought to most of the investors. Now a day’s most of the investments are happening to nearby Asian countries and Philippines. The second factor global rise is common for all the investments irrespective of location.

TIOLUWA
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Blogger
Re:
TIOLUWA   11/18/2011 5:20:32 PM
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I think the concept of Regoionalization is sufering from over generalization.

Not everything can be outsourced, and not everything can be gotten locally.

It is hard to find a manufactured product that was 100% made in one country.

i guess the point is to run things in sucha  way that a large chunk of the money stayins home rather than being spend on outsourcing.

I however find China's import statiscs interesting.

garyk
User Rank
Inventory Controller
Re: Not sure about this
garyk   11/18/2011 2:57:13 PM
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Jbond, Good information! Lets study the Table, Machinery to copy, the rest of the stuff is to keep there manufacturing going. Chevy is part of Toyota or Toyota is part of Chevy? We're driving Honda and Toyota because of reliability! Can 80% of people people driving foreign cars, Honda and Toyota all be wrong? When your on the FWY look to the right and left and the percentage of foreign cars!

How about CHINA IMPORTS of shoes, shiirts, cloths in general,  sports equipment, books, after market replacement parts for cars, not to mention all the counterfieting thats going on in CHINA!  

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