Contact Center Solutions Featured Article

February 09, 2009

Manufacturers Contemplating Returning to U.S.

By Brendan B. Read


U.S. (and Canadian) electronics and tech firms and their suppliers seeking to cut costs, improve service, and gain market share (hint, Nortel (News - Alert)) may want to keep, patriate, or repatriate their manufacturing back to home turf from offshore nations such as China. And some firms are beginning to look at and doing just that.
 
A new study by Archstone Consulting, a management strategy and operations consultancy, found that almost 90 percent of companies surveyed are considering or have begun changing their manufacturing and supply strategy and are being more and more selective in offshoring. The drivers are rising costs, declining flexibility, and management issues.
 
The report reveals that manufacturers have seen a significant cost increases related to offshoring manufacturing for export purposes rather than in country demand. The primary sources are:
 
*          Ocean freight costs have increased 135 percent highlighting risks and cost volatility
*          The global commodity price index has risen by 27 percent
*          The Chinese Yuan has gained 18 percent in value compared to the U.S. dollar
*          Chinese manufacturing wages have risen by 44 percent
 
“The perceived 25-40 percent cost savings associated with off-shoring has previously been made possible by low labor costs, cheap commodities and favorable exchange rates – factors that no longer exist in today’s marketplace,” points out John Ferreira, Principal and Global Manufacturing Industry Practice Leader, Archstone Consulting.
 
In addition to the rising costs of conducting business on a global basis, the study found from respondents several soft cost issues, which affect the true cost of offshoring. These include:
 
*          Slower cycle/delivery time (59 percent)
*          Reduced supply chain flexibility and responsiveness (56 percent)
*          Lost visibility, coordination and control over the supply chain including quality (50 percent)
*          Bottlenecks in logistics networks such as ports and transportation (50 percent)
 
There are other factors not identified by the paper that are beginning to weigh up on manufacturers in their offshoring decisions, and on policymakers. The first are the economic stimulus packages that are in the works in the U.S. and Canada. Elected officials have made it very clear that their preference is for taxpayer dollars to be spent at home. There is also priceless plentiful free advertising through positive publicity and market share that could be gained from moving jobs back from other countries.
 
The second issue is the emissions and increasing negative publicity caused incurred in transporting goods long distances, and in handling them at port areas. The large oceangoing freighters and trucks carrying containers from them to railcars are major sources of pollutants. 
 
As a result companies are contemplating the re-establishment of manufacturing domestically, amid rising costs and other strategic challenges within the offshoring model said the paper. As they reassess their manufacturing and supply chain strategies for today’s global economic environment, the trend may create significant job opportunities in the U.S.
 
“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,” says Ferreira.

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Stefania Viscusi


Related Contact Center Solutions Articles

    Mitel Integrates Contact Center Solution with VMware View

    With an objective to bring desktop virtualization to the contact centers, virtualization and cloud infrastructure solutions provider VMware Inc. has integrated Mitel's Contact Center Solution for VMware View. This integration enables contact center managers to better serve customers with centralized administration and better security as well as the ability to reduce costs. [ Read More ]
    02/14/2012

    Blending: The Key to Broadening Call Center Quality without Additional Resources

    While many a corporate call center has found, in recent years, the need to tighten its belt, other call centers with shallower pockets, such as those that support non-profit groups or government agencies and civil services, have found the budget crunch to be even more dire. [ Read More ]
    02/14/2012

    Is Improperly Used CRM Dragging Your Customer Support Down?

    While companies have been adopting ever more technology to try and support their customers to the best of their abilities - the sales figures for customer support solutions and applications bear witness to this - customers have never been more dissatisfied. Weird? A bit. And it might just be a function of improperly chosen, implemented and used customer relationship management (CRM) solutions. [ Read More ]
    02/14/2012

    VXi Launches UC ProSet for Contact Center Users

    The UC ProSet wired headset designed especially for unified communication users in contact centers and offices has been launched by VXi Corporation. VXi Corporation has improved its unified communication B2B line with this new headphone, the UC ProSet, which incorporates several features for ease and fashion of contact center users. [ Read More ]
    02/14/2012

[ View all Contact Center Solutions Articles ]

Socialize with us

FREE Contact Center Solutions eNewsletter

Click here to receive your targeted Contact Center Solutions Community eNewsletter.[Subscribe Now]

Industry News

Featured Resources

Contact Center Solutions Glossary of Terms

Press Releases

About the Contact Center Solutions Community

    Welcome to the Contact Center Solutions Community The Contact Center Solutions Global Online Community, Sponsored by Interactive Intelligence, is designed to serve as the industry's premier resource for information and research on Contact Center Solutions technology and deployment strategies.