A decade ago, off shoring processes such as manufacturing to Asian countries was quite popular. It seemed like a wise business decision as businesses cut the costs associated with manufacturing locally. Today, the decision to off shore is one that is being reconsidered by many as more and more companies are reshoring their business practices. This decision is one that is being applauded by many as more job opportunities open up.
Currently, there is a lot of talk about the pros and cons of off shoring in global manufacturing. While some consider this unpatriotic, business people consider it as an economical and business decision.
Pros and Cons of Offshore Manufacturing
Low Cost Production: Countries such as China and India are well known for their low costs in production. The manufacturing industry in these countries is highly competitive making it cheaper to produce goods there than in western countries. Transferring your manufacturing process to such countries does not require you to set a manufacturing plant due the availability of various manufacturing plants. This drastically reduces the costs that are associated with making goods.
Wholesale Business: Not only is offshore manufacturing cheaper, it also opens the business into the world of wholesale and online sourcing business. Countries that produce mass market goods give your business access to the world market. People buy goods in bulk from all over the world and this is good for any business. The raw materials are also brought by suppliers in bulk making it more cost efficient to manufacture products.
Automation of processes: Due to the competition in manufacturing, companies in these countries are bound to get the best in technology. Manufacturers are always on the lookout for new technology and effective business solutions that make the automation process efficient.
Large Scale Skilled Labour: With so many manufacturing plants, the number of skilled labour is bound to be high in these countries. Not only do the locals have years of experience but other professionals are hastily moving to these countries to share their skills and acquire more knowledge.
Loss of Jobs: Loss of employment is one of the major disadvantages that come with offshoring business processes. A good number of employment opportunities are lost when businesses move their production overseas.
Substandard Goods: Another detriment of this trend is that alot of goods that are not of good quality may make their way into the market. The demand for goods leads to using materials that may be poor in quality and even sometimes toxic. Substandard goods have seen the rise in lawsuits from consumers and a number of recalled goods from the manufacturers.
The rise in offshoring manufacturing companies does have its benefits and disadvantages. However, reshoring is now being encouraged especially by western governments. This is seeing the return of major manufacturing companies to their original countries. Not only does this bring back a sense of trust in the quality of products being produced but it also brings back jobs and improves the country’s economy. Though the move to reshore is highly applaudable, it also needs to make business sense. Consumers too are not fully on board with online sourcing of cheap goods a trend that is increasing by the day.