Archstone Consulting's study reports that companies are contemplating the re-establishment of manufacturing domestically, amid rising costs and other strategic challenges within the off-shoring model. As companies reassess their manufacturing and supply chain strategies for today's global economic environment, the trend may create significant job opportunities in the U.S. For years, the concept of off-shoring, or moving production and/or sourcing operations to a foreign country, has been the mantra of any supply chain manager looking to cut costs. Now, amid volatile oil prices and an uncertain global economic future, this analysis no longer is a certainty. Furthermore, companies that will commit to domestic manufacturing can spur much-needed improvements in customer service, innovation and job creation - especially when servicing the large domestic market.
The Archstone study revealed that in the last three years, manufacturers have seen a significant increase in costs related to off-shoring manufacturing for export purposes rather than in country demand, which include:
In addition to the rising costs of conducting business on a global basis, the study found several soft cost issues, which affect the true cost of off-shoring, including:
The study found that almost 90% of the companies surveyed are considering changing or have begun changing their manufacturing and supply strategy and are being more and more selective in making off-shoring decisions. U.S. manufacturers have become increasingly aware of the need for a more sophisticated total cost model that considers factors such as supplier price and terms, delivery costs, operations and quality costs, customer-centric supply capabilities and other situational costs that arise. Manufacturers who approach sourcing decisions with a holistic perspective - evaluating market and customer demands and competitive strategy against a comprehensive knowledge of total cost - will likely increase revenue and lower costs, giving U.S. companies a powerful competitive advantage.
Archstone Consulting surveyed 39 senior executives from U.S. and European-based manufacturers, primarily from consumer goods and electronic industries, to assess the evolving footprint of global manufacturing and supply networks.