Re-Shoring or Near-Shoring Concepts Should be Strongly Considered when the OEM’s Goal is To Deliver Optimum Balance between Landed Cost and Time to Market

摘要

The old tactic of outsourcing to a low cost geography simply to deliver lowest cost direct and indirect labor was never arnpanacea supply chain solution. In fact, when evaluating solutions for lower volume and higher mix products typically found in the medical, industrial and public safety segments of the OEM market, IL & DL costs are only one subset of the total costrnto land the product and service the ultimate customer. In this paper, there will be examination of what actual cost components should be included in a landed cost analysis, the soft costs that an OEM should consider to deliver outstanding performance in quality, logistics and delivery management of the supply chain solution. A detailed comparison using a “case study” will be presented to demonstrate a total landed cost option versus one that is focused on IL/DL cost. In addition, near-shoring options have developed over recent years initially for consumer oriented products such as cellular phones and printers with the goal of optimization of landed cost in the end use market. There will be shared a few case studies which demonstrate an optimum approach for total landed cost, ease of communication and avoidance of the typical issues that make an outsourcing only approach problematic. These include: different language and culture, long distances and different time zones, investing time and effort on establishing trust and the complexity these elements contribute to the development of long term relationships between an OEM and EMS partner. In summary, Near-shoring, when developed in partnership between thernOEM and EMS provider can be a marketing differentiator for those clients who wish to set themselves apart by servicing their customers in the market close to “home”.