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Managing 'global production' ― Selected news articles

From low-cost country sourcing to 'profitable proximity sourcing'

Too many companies wind up sourcing products from low-cost countries based on direct per unit costs and not total supply chain costs, says a leading researcher. 'While low-cost manufacturing is seductive initially, a total-supply-chain-cost perspective is far more sensible'.

SupplyChainDigest

Hidden links in Asian supply chains

Supply chain visibility is a critical issue in the development of trade between the Far East and Europe, but industrial fragmentation can hide the true source of a product.

SupplyChainStandard.com

India: Investing in America

From makers of steel to specialty packaging, world-class Indian companies with sophisticated management are acquiring or merging with U.S. companies. Some Indian companies will surely falter as they venture into American waters. But generally, investors, managers, and employees alike should welcome the widening of the M&A gene pool to include sources from India.

BusinessWeek

Chinese companies face uphill path for profit in India

India shines like a lure for Chinese companies seeking to expand abroad, and on first glance the Indian market looks like a natural fit. But Chinese companies have found that profits in India are hard to find. Tax barriers are everywhere, eroding cost advantages. Corruption is rampant, adding another layer of difficulty. And Chinese goods have a low-quality image that is very hard to shake.

YaleGlobal Online / The International Herald Tribune

Is Mexico the new China?

With skyrocketing oil prices, escalating labor costs in China, and an appreciating currency there, companies targeting the US market are doing the math and giving Mexico another look. So-called "nearshoring" could generate a reverse globalization that brings manufacturing back to Mexico. The driving factor of nearshoring is high oil prices, which is raising the price of shipping. "In a world of triple-digit oil prices, distance costs money," states a recent report by CIBC World Markets. "And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder."

The Christian Science Monitor

Oil and gas prices: Will sourcing come closer to home?

Recent rises in the price of gasoline, diesel fuel, kerosene or other petroleum-based products are cause for concern, especially for companies based in North America that have outsourced to China and other offshore locations with the sole purpose of taking advantage of cheaper labor. Now, ballooning transportation costs pushed upward by oil prices are threatening to erase whatever savings those offshoring companies have enjoyed until now.

Logistics Management

India's hi-tech lag

The last two decades have seen the gradual erosion of US and EU dominance in hi-tech manufacturing. The principal challenger has been and remains China. India, unfortunately, has lagged far behind, though capabilities generated during the import substitution years have given it some recent gains in global markets.

The Hindu Business Line

Is China’s pool of surplus labour drying up?

Since China has by far the world’s biggest labour force ― almost twice that of America, the European Union and Japan combined ― Chinese wages are one of the most important prices in the world. Thus recent claims that it is running short of cheap labour would, if true, have huge consequences not just for China, but also for the rest of the world. Stephen Green, an economist at Standard Chartered, thinks that talk of China’s vanishing labour surplus is premature. In a report this year he argued that the surplus would not run out for another decade.

Economist.com

Procurement leaders focus on strategic alignment

Leaders in procurement across the globe are increasingly focusing on strategic alignment, reporting directly to the CEO and going beyond strategic sourcing basics, according to a new study. The survey of 295 companies across the world by A.T. Kearney found that a range of external market changes – from inflation through to sustainability challenges – have created a more difficult operating environment. Increasingly, strategic and sophisticated procurement practices are required to deliver a genuine return on investment.

Supply Chain Review

ASEAN free-trade zone turns Vietnam into major factory base for Taiwan

Hoping to tap the mutually-beneficial advantages available from the eventual formation of ASEAN (the Association of Southeast Asian Nations) into a free-trade zone, Taiwan-based manufacturers are flocking to set up plants in Vietnam, which has been often reported as quickly developing into their second-largest overseas production base, trailing China.

CENS.com

US unmoved by imminent loss of industry top slot to China

The news that China is about to take over the top slot in global manufacturing from the US may cause only a ripple of surprise among Americans: many of them erroneously assume that the country lost the dominant position long ago. According to projections by Global Insight, a US-based consultancy, the US this year will cling on to its long-time number one position in world manufacturing production, a place it has occupied for more than 100 years.

FT.com

China’s ambition soars to high-tech industry

No longer content to be the home of low-skilled, low-cost, low-margin manufacturing for toys, pens, clothes and other goods, Chinese companies are trying to move up the value chain, hoping eventually to challenge the world’s biggest corporations for business, customers, power and recognition. The government is backing the drive with a two-pronged approach: using incentives to encourage companies to innovate, but also moving to discourage low-end manufacturers from operating in southern China.

The New York Times

Eastern promises

China has long been the flagship nation for US manufacturers looking for low-cost sourcing opportunities. But the Chinese government's recent efforts to control and even curb the accelerated rate of industrial growth has caused many companies to start looking to Central and Eastern Europe for competitive advantage ― from the Baltic states and post-Soviet Russia, Ukraine and Belarus to Turkey, Romania, Poland and the former Yugoslavia.

IndustryWeek

Mexico's foreign-owned factories make comeback

Mexico's maquiladoras, foreign-owned factories, have rebounded in recent years as engines of economic growth in the face of overseas competition, especially from China. Part of the reason for the recovery has been their shift toward high-valued-added industries ― such as aerospace, custom-order electronics and pharmaceuticals ― better positioned to compete in the global and US markets.

Commercial Property News

Where does your company have savings leakage in global sourcing?

Companies report that the cost savings realized from offshoring and global sourcing initiatives do not meet initial expectations, disappointing company executives and ultimately shareholders. As shown in this article, there are many potential sources of savings leakage that reduce and, in some cases, eliminate the expected total cost reductions from global sourcing initiatives.

SupplyChainDigest

China, Russia and India boost their global company profiles

China, Russia and India ― helped by their surging economies ― have the fastest growing presence in the FT500 list of the world's most important companies. They have breached the top 10 and muster 50 companies between them in the top 500, against having hardly any presence a decade ago.

FT.com

Who's afraid of a feverish economy?

Foreign investment keeps coming as the Vietnamese government moves to restrain exuberance. Foreigners are looking at long-term fundamentals, which few would deny seem attractive. While the government has revised its projections downward, it's predicting gross domestic product growth of 7% this year, compared with 8.5% in 2007.

BusinessWeek

South Africa needs to be a team player in global manufacturing

South African manufacturers need to see themselves as being part of global product production community that combines the best resources from around the world to take a product to market, rather than trying to keep all the processes on shore.

Pressportal.co.za

MNCs face threat from emerging market players

The traditional model of western business is under challenge from the process of globalisation in emerging economies, according to Cambridge University's Institute of Manufacturing. BRIC economies will together be more than half the size of G6 economies by 2025 and will overtake them by 2040. In all probability, the MNC giants of tomorrow will emerge from these economies.

The Economic Times

Best practices in low-cost country sourcing: 10 tips to better China sourcing

Everyone in the supply chain seems to have a 'China story' these days. Either they found dramatic savings and saved their company a boatload of cash, or they got burned by a fly-by-night supplier and vow never to source overseas again. But, as in most things, when it comes to sourcing in China, success is as much dependent on the preparation as the execution.

Purchasing.com

Global supply chains: getting to accurate 'total landed costs'

Despite the growth in global sourcing, 'total landed cost' calculation still lacking in scope, technology support, in many companies.

SupplyChainDigest

Producers lose taste for going overseas

A small but growing number of European companies that have moved production abroad are moving it back closer to home after being disappointed with the results and rising costs.

FT.com

China’s new formula: manufacturers begin to move beyond low cost

A joint venture between BASF and Sinopec, a Chinese energy group, is set to receive USD 900m in investment. According to the head of BASF's Asia activities, the venture will combine China's famed low costs with the development of new design and production skills.

FT.com

Manufacturers feel the heat over emerging-market sourcing

Heightened publicity over product recalls has made product safety, as well as product quality and environmental standards, in emerging markets a hot-button issue, according to a new "Innovation in Emerging Markets" annual study by the Deloitte Touche Tohmatsu.

IndustryWeek

India has potential to become global manufacturing hub

India is far behind the Asian tigers—China, Japan and Taiwan—in manufacturing excellence. But India has the potential to become the most lucrative manufacturing hub for global majors.

The Economic Times

Exploiting the global supply chain

With the move offshore, the complexity of managing the supply chain increases exponentially. According to experts, it requires a well-defined and proven strategy. Companies must be willing to examine and rethink every aspect of their existing business model. That means looking inward before expanding outward and revising P&Ls to focus on total landed cost.

World Trade Magazine

Bold changes ahead: Electronics manufacturing rethinks the supply chain

Since the advent of contract printed circuit board assembly almost three decades ago, the one certainty in outsourced electronics manufacturing has been uncertainty. Regional shifts, service offerings, and the ups and downs of the business all require quick reflexes. Companies thrive if they are able to embrace the uncertainty of constant change.

ManufacturingBusinessTechnology

Four trends in China sourcing

China's role in the global supply chain is changing faster than ever. Companies that procure goods from China must keep up with the country's evolving challenges to take full advantage of the opportunities.

ThomasNet

Institute for Manufacturing warns against quick fixes

Many firms are failing to establish effective global production networks and rely too heavily on short-term outsourcing and offshoring to countries such as India and China, IfM has warned.

BusinessWeekly.co.uk

The future of the supply chain

With today's globalization explosion, it is clear that companies cannot survive without recognizing and integrating a multitude of supply chains.

IndustryWeek

India can be a hub for high-end, cost-efficient engineering

Education level, availability of qualified engineers, flexibility, cost efficiency of labour, and the interest of Indian engineers to learn and to look for improving existing designs ― factors that weighed in favour of India when Mann+Hummel wanted to set up a design and engineering centre.

The Hindu Business Line

China's factory blues

The days of ultra-cheap labor and little regulation are gone. As manufacturers' costs climb, export prices will follow

BusinessWeek

Poland: Red tape forces companies across the border

A new trend is emerging among Polish companies no longer willing to put up with the rising cost of hiring skilled labour and dealing with the country's complex bureaucracy. They have begun recruiting and opening bases in Germany, a country better known for its well-paid skilled workers.

FT.com

Russia to set investment rules

Russia will regulate investment in so-called strategic sectors, meaning that foreigners will henceforth have to seek government approval if they plan to make significant investments. The law represents the culmination of a trend in recent years toward greater economic restrictions in Russia.

BusinessWeek

Companies look to China as growth market and manufacturing hub

The advantage of China solely as a low-cost, manufacturing-for-export market is diminishing. Companies that integrate China into their global supply chains as a source of competitive advantage are far more successful than companies that pursue narrower objectives in China, according to a study jointly conducted by management consulting firm Booz Allen Hamilton and the American Chamber of Commerce in Shanghai.

American Machinist

Finding your place in the global value chain

The arrival of an interconnected global marketplace on Internet time means value chains are rapidly replacing supply chains. This switch requires business owners to think well beyond traditional supply-chain arrangements in terms of greater levels of collaboration with both suppliers and customers. It also requires employees with skills far superior to their predecessors and a world outlook framed by these new realities.

CRMBuyer

Mexico near-sourcing grows more attractive

Proximity is invariably the first benefit mentioned when discussing near-sourcing in Mexico. But it’s far from being the only one as Mexico morphs into a business friendly country.

World Trade Magazine

Strategic sourcing: Dow Chemical turns inward

The chemicals giant expands its internal outreach as it moves from the tactical to the strategic in procurement activities. Since the mid-1990s, purchasing has taken on a more global focus, providing its services to each of the company's businesses located at facilities in 175 countries.

Purchasing.com