Manufacturers Revisiting Outsourcing

U.S. Manufacturing is Expanding

Significant U.S. “outsourcing” of manufacturing to overseas companies has been with us for decades.  Upper management of U.S. companies owes a duty to the owners of those companies to deliver the best quality offerings at the lowest costs so as to maximize profits.  Accordingly, the manufacturing function was often assigned to foreign companies so as to remain competitive.

Currently, a consensus has arisen among many economists and executives that significant factors have emerged in this arena which may have contributed to an expansion of U.S. manufacturing.  So, many top U.S. executives are revisiting the issue in order to be prepared for adaptation to that resurgence if it should materialize.

One consideration is that oil has reached exceptionally high prices around the world.  In recent years new, viable natural gas sites have been found in the United Sates. These sites should contribute to lower energy costs.  Accordingly, manufacturers will be able reduce the high cost of transportation related to domestic manufacturing.

Another factor is that in the last few years, labor costs in China have increased year-over-year by nearly 20% and, at the same time, labor costs in Mexico have increased year-over-year by 5%. In contrast, labor costs in the United States have risen year-over-year by only 3%.

Further, since 2003 improvements in applicable technology have enabled  productivity increases and require fewer, but more skilled, workers. Inexpensive sensors, fast computing, robotics and other new technologies have led to new user-friendly factory automation.

As might be expected, the economic advantages of outsourcing must be weighed against inherent risks such as the practicality of geographic, intellectual property, political turmoil and currency risks. These risks have shown to outweigh many of the assumptions made a decade ago. The geographically diversity in supply chains of major manufacturers have created a multitude of increased risk for each link in the supply chain.

In the current environment, those who engage in outsourcing should revisit their operations and business strategies related to outsourcing and pay very close attention key assumptions related to expenses and risks. The risk and expense profile may well have proven to be accurate for much of the last decade. Now is the time to re-examine these assumptions and reconsider where (and by whom) your products should be manufactured. Most importantly, operations executives should realize that outsourcing and offshoring are cycles — not trends.

For more information, see:

Is Your Manufacturing and/or Wholesale Distribution Enterprise Growing and You Need Automated Software and Technology?

Contact Cornerstone Consulting for your personalized Business Analysis.

Manufacturers, Wholesale Distributors and Online Retailers Rely on Cornerstone for Automated Enterprise Resource Planning (ERP) Systems of Financial Accounting, CRM, MRP, Inventory Control/Tracking, Bar Codes and Scanning, EDI, Warehouse Management, Web Apps, Advanced Technology Solutions and IT Support

Why do so many small and midsized companies rely on Cornerstone for ERP solutions, related services and technical support? Simply stated, our level of experience is unsurpassed. Cornerstone Consulting has been providing state-of-the-art business software systems, as well as related technical support, to small and midsized manufacturing and wholesale distribution enterprises for more than thirty years.

Cornerstone Consulting’s areas of expertise include, but are not limited to:

  • SAP Business One
  • E-commerce
  • M-commerce
  • Mobility
  • Business Intelligence (BI)
  • Business Analytics
  • Internet
  • Bar codes and Scanning
  • EDI
  • Databases
  • Cloud Computing
  • Custom Programming
  • Strategic Marketing
  • Software as a Service (SaaS)
  • Web Development

If you’re looking for a superior software and technology consulting, web development, and IT firm specializing in business automation and performance optimization, you’ve found the right company. You can rely on Cornerstone to provide outstanding software products, related services and technical support for all areas of your small or medium sized business, such as: financial accounting, operations, customer relationship management, sales, inventory control and tracking, warehouse management, e-commerce, and more. Cornerstone’s “dream team” of programmers, trainers and consultants specialize in providing our Manufacturing, Wholesale Distribution, and Online Retail clients with optimal business process configuration, integration and automation.

Enterprise Business Needs Analysis
Thinking about making your business highly competitive? We’d like to hear your ideas concerning re-engineering your  operations with cutting-edge software and technology. We’re excited to discuss how your small or medium enterprise (SME) can not only run better but also out-maneuver, and out-perform your competitors.

Call us today at 813-321-1300!

No time to call us now?  No worries ““ we know you’re busy. If you’d like, you can complete the brief form within the Contact Cornerstone page, and let us know a good time to contact you in the near future. We’ll touch base with you when it’s convenient for your schedule.  We’re looking forward to connecting with you!

Leave a Reply