At least one consulting firm actually understands that going abroad to reduce manufacturing costs is a bad idea.
Lean advocates have long argued that the increased waste from overseas sourcing – in the form of additional transportation plus longer cycle time – makes no sense. Unfortunately, too many businesses and consultants believe – wrongly – that the lower production costs in
Kudos to Boston Consulting Group, which issued a report earlier this year entitled Surviving the China Rip Tide: How to Profit from the Supply Chain Bottleneck.
BCG cites a variety of factors other than actual manufacturing that contribute to costs, including delays caused by bottlenecks at ports and the increased risk of stocking items that don’t sell because you had to purchase them too far in advance.
The authors of the report – George Stalk, Jr., and Kevin Waddell – don’t say you should never outsource from
We believe strongly that a firm focus on reducing time and variability in the China-anchored supply chains serving
In their rush to source from
Stalk and Waddell don’t actually use the word “lean” in their report. But they seem to understand.
Incidentally, in a posting on the same topic, Kathleen Fasanella at the Fashion Incubator blog writes about the book Birnbaum’s Global Guide to Winning the Great Garment War. She comments:
His greatest lesson is that it's a wasted exercise to chase the lowest cost production considering the variables of quotas, the nation of origin politics and general conditions including infrastructure. If anything, I think this book is more likely to convince you to produce domestically than not.