I've been waiting for this one. The Financial Times, in Crisis and climate force supply chain shift, reports increasing energy costs will cause more regional sourcing for parts and supplies.
Supply chain experts agreed, with Ernst & Young underlining how as much as 70 per cent of a manufacturing company’s carbon footprint can come from transport and other costs in its supply chain.
What kills me is the article mentions the closest cheap labor market as the location...not the country where the final product is planned for sale.
If supply chain analysts could figure this out, one would expect there are some numbers that might show one could actually create jobs and source domestically (God Forbid!)
In So Cheap for the China Price, there is a new concept from outsourcers, (cough, cough) to examine the entire price savings instead of focusing on cheap labor.
Heegan now looks like a visionary. A growing number of companies are moving beyond the usual considerations of labor and raw material costs in deciding where to produce goods to calculate the "total cost of ownership." That means tallying expenses associated with things such as storage and delays. By this light, the so-called China price, which always seemed to be at least 40% below U.S. costs on everything from bedroom furniture to telecom gear, isn't so low. In fact, China's once-formidable edge in manufacturing has all but disappeared in some industries, according to a new study by Southfield (Mich.) firm AlixPartners, which researches and consults on outsourcing.
What is still awful is this:
Src: Business Week
So, what this tells me is those who jumped on the offshore outsourcing bandwagon did not even examine the entire supply chain the entire costs and this does not even include the damage to the U.S. economy, the middle class, the U.S. worker....
Perhaps these costs can be analyzed by U.S. policy makers to consider leveling the playing field as well as the promotion of using U.S. labor, U.S. manufacturing and sourcing domestically instead of simply jumping on the China or India offshore outsourcing bandwagon.
How many other manufacturing or product supply chains in reality don't add up in costs to be offshore outsource?
Reading reports like this makes me wonder what are they thinking?