The Practical Guide to Reshoring
More companies have moved their supply chains back into U.S. borders due to low returns and the overwhelming complexity of offshore operations. When a company decides to offshore its supply chain, it is relatively easy to assess direct costs, which are typically 15-17% of product cost. But companies are often caught off guard by hidden costs, which typically add 5-7% to product cost.
Moving a supply chain abroad complicates a company’s ability to manage its supply chain dynamically and increases risks, such as intellectual property theft, under-performance by a vendor, or a disparity between what is negotiated and delivered.
While a significant amount of literature dedicates itself to helping companies manage offshore operations, solutions are often vague and esoteric and certainly do not guarantee cost savings or quality improvement. This paper examines five key areas of hidden cost driving many companies to conclude that modern, efficient manufacturing and supply chain management are best conducted near the point of use.
You'll learn about:
- How hidden costs add 5-7%.
- Quality issues that add 8% to production costs.
- Supplier selection problems which add 1%.