Global Supply Chains are High Risk? Time to Bring Production Closer to Home Markets!
By Stephen Slade on Mar 02, 2012
Each week it seems like supply chains become battered with new turmoil or unrest - from political risk, to natural disasters and disruptions in the natural flow of goods to markets. Considering it takes 4-8 weeks for products to cross the oceans, organizations are paying attention to the various categories of risk being imposed on their supply chains. David Simchi-Levi, Professor at MIT, writes in the HBR blog (Feb.27'12) about these exposures, that firms are looking to bring back production from overseas to native and consumer markets. He mentions a few organizations that have taken steps to restore American production as:
- Ford - moving jobs back to the USA from China and Mexico
- Caterpillar - investing $120M in a new plant in Victoria Texas to produce excavators
David talks of an 'Genuine Transformational Period' taking place as a result of labor arbitrage and growth of offshore consumer markets. Washington is paying close attention to these shifts and looking for ways to support this trend - to bring back the manufacturing jobs.
David closes by stating that "...without a concentrated, collaborative, national effort, it will be difficult for the United States to reestablish worldwide manufacturing prominence". for more info, go to the HBR Insight Center on American Competitiveness