Companies base manufacturing decisions on financial criteria and often consider and discuss, recent politics, tax, regulatory, and intellectual property. However, manufacturing is more than just cutting cost and outsourcing. Don’t just think about manufacturing as a way to cut cost, by doing so you might miss an opportunity to be innovative or you might create a disconnect between your company and the product.
From a global perspective, some may go back and forth with the pros and cons. The pro being that globalization creates a global economy, keeping cost low for consumer and creating relative wealth in poorer communities. The con, however, is that manufacturing abroad could evolves into a foreign dependency on goods or a competitive disadvantage.
The Harvard Business Review explains that the mass migration of high-quality cost-competitive products, is damaging America’s ability to retain a lead in many sectors. U.S. industries, such as, flat-panel displays, advance batteries, machine tools, metal forming, precision bearings, solar energy, wind turbines, are threaten by foreign competition. Other industries, such as, biotechnology, aerospace, and high-end medical devices, in the U.S. are now “endangered,” reports HBR.
The biggest problem is determining whether outsourcing manufacturing will diminish innovation. The frame work to that decision making involves two things:
1) The ability of R&D and manufacturing to operate independently of each other
2) or Modularity; and the maturity of the manufacturing technology
Source: Harvard Business Review