The trend in the global manufacturing industry focuses its attention on bringing manufacturing back to the United States, known as reshoring. The major cause for this decision is mainly due to the rising labor cost that occurs in places like Vietnam, China and other outsourcing countries. As NPR News stated, “… at least 200 companies have already returned, and there's been a dramatic jump recently in the number of companies saying they're seriously thinking about [reshoring] .” According to the Wall Street Journal, the increase in labor cost was made by the government to boost the domestic consumption and economy without relying too much on export . However, with the increase in wages, those countries are losing its competitiveness in the manufacturing industry. Multinational companies, especially from the United States, realized that the strategy of producing goods by outsourcing has become ineffective.
To gain a competitive advantage and increasing market share, a company must understand and analyze the strategy they choose in managing their total system. Reducing cost by moving production to a lower cost country is proving to be one of the many factors that contribute to the success of a company. There is no guarantee that a successful strategy will always work in the future or in the face of change. A strategy will only work for a certain period of time until variation in the global macro environment comes into play, such as the rising of labor cost. As Guy Morgan, the Managing Director and Global Operations Advisory Group Lead says, “those having a more macro view will do best. Additionally, those recognizing the needs of the global customers will do best, finally, those having the agility to move quickly with v...
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Heizer, J., & Render, B. (2011). Operation Management (10th Edition ed.). New Jersey: Pearson Education.
Goldratt, E. M., & Cox, J. (2004). The Goal: A process of Ongoing Improvement (Third Edition ed.). North River Press.
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