Manufacturing strategy
PART-A 1.1 Introduction to OFF Shoring and NEXT Shoring:
Off shoring is the type of relocation of an industry or an company of a business from one country to another i.e typically an operational process, such as manufacturing process.
Next shoring is “the transfer of business or manufacturing processes to companies in a Nearby location. Where both parties may be benefited from one or more of the following dimension of proximity i.e Cultural, linguistic, political etc.,
1.2 Understanding the change in Market, Manufacturing Cost and Technology:
Over the decade Manufacturing cost, market and Technology has played an important role in selecting the location of the Manufacturing industry weather it has to Off shored on Next shored. Therefore understanding these three are the major factors for selecting the location of an Industry.
Combination of economic force is fast eroding in developing nations cost advantage as an export platform for developed countries market. Mean while with an increasingly flexible work force and a better corporate sector is becoming more attractive place for manufacturing many goods consumed in the developed countries. An Analysis conducted by BCG (Boston Consulting Group) that by sometime around 2015 for many goods destined in the developed countries manufacturing in their neighbouring place is more economical than producing in the developed nations. The key reasons for this thought are mentioned below,
Wage and benefits increases of 15 to 20 % per year at the average in developing countries which will slash the advantage over low cost states in the Developed countries. Because Labour accounts a portion of Products Manufacturing Costs.
Transportation Cost, Duties, supply chain risks, Industrial real estates and other cost have increased considerably in the past decade this also plays a role but this additional cost will be differed at the minimum level when compared to developed and developing nations.
Technology which is
Off shoring is the type of relocation of an industry or an company of a business from one country to another i.e typically an operational process, such as manufacturing process.
Next shoring is “the transfer of business or manufacturing processes to companies in a Nearby location. Where both parties may be benefited from one or more of the following dimension of proximity i.e Cultural, linguistic, political etc.,
1.2 Understanding the change in Market, Manufacturing Cost and Technology:
Over the decade Manufacturing cost, market and Technology has played an important role in selecting the location of the Manufacturing industry weather it has to Off shored on Next shored. Therefore understanding these three are the major factors for selecting the location of an Industry.
Combination of economic force is fast eroding in developing nations cost advantage as an export platform for developed countries market. Mean while with an increasingly flexible work force and a better corporate sector is becoming more attractive place for manufacturing many goods consumed in the developed countries. An Analysis conducted by BCG (Boston Consulting Group) that by sometime around 2015 for many goods destined in the developed countries manufacturing in their neighbouring place is more economical than producing in the developed nations. The key reasons for this thought are mentioned below,
Wage and benefits increases of 15 to 20 % per year at the average in developing countries which will slash the advantage over low cost states in the Developed countries. Because Labour accounts a portion of Products Manufacturing Costs.
Transportation Cost, Duties, supply chain risks, Industrial real estates and other cost have increased considerably in the past decade this also plays a role but this additional cost will be differed at the minimum level when compared to developed and developing nations.
Technology which is