LOWEST COST ISN’T ALWAYS THE ANSWER

LOWEST COST ISN’T ALWAYS THE ANSWER
Lower tariffs and new markets opening to foreign investment have complicated the decision about how manufacturing should be organized, says Nikki Tait

Visit any western toy superstore, and most of the basic products will say “Made in China” or, perhaps, Malaysia or Indonesia. Until, that is, you reach the Lego section. Suddenly, the boxes are more likely to identify Denmark, Switzerland or the US as the country of origin.
It might seem logical that a global company, selling into a multitude of country markets and measuring its market share in global terms, should place production facilities wherever costs are lowest. But Lego, the privately-owned Danish company, has for years concentrated its manufacturing in Europe and the US, arguing that this best satisfies design and quality requirements. For Lego the notion of cost is only a small part of the production picture.
So how does a global company go about organising its manufacturing network? The decision has become more complicated over the past two decades due to a number of factors. On the one hand, trade barriers across much of the world have declined sharply. Simultaneously, a range of new markets - notably in Asia and Eastern Europe - has opened to foreign investment.
This has made global production much more possible. But it has also reduced the need for many overseas plants. Markets that previously demanded local production facilities-because tariff levels made importing far too expensive - can now be supplied from other countries.
Plainly, in this newly-liberalised environment, basic manufacturing costs do become more significant. But there are limits to a purely cost-driven approach. Many companies have built their current production structure through acquisitions over a number of years, rather than in a planned way.
Another problem is that costs themselves can be subject to rapid change, making today's Indonesia, for example, tomorrow's Hong Kong. This adds a further dimension to any global company's investment decision-making. The reality is that manufacturing businesses also need to think: how quickly can we pull the plug?
Some companies have addressed this issue through what is called the “part configuration” model. This involves selecting a number of regional manufacturing bases which are viewed as longer-term investments, and augmenting them with lower-skilled assembly plants, which can more easily be moved between markets.
The availability of suitable employees also needs to be examined when investment decisions are being made. There may be close links between manufacturing and product innovation and if too much focus is put on low-cost assembly operations, product innovation tends to suffer.
Perhaps the hottest topic is whether a global company needs to be a producer at all. Outsourcing of production to other suppliers gives a company more flexibility, and fits well with a global strategy. A business may be better placed to supply differentiated products into different regional markets, and it can probably adjust more swiftly to changing cost considerations. These operational advantages come in addition to the financial benefits of outsourcing, such as lower capital employed.
But there can be pitfalls. Perhaps no company exemplifies the outsourcing trend better than Nike, the sports shoe group. On paper, its strategy of subcontracting the production of its shoes to local factories looks eminently sensible. But these arrangements have turned into a public relations disaster in recent years, as human rights campaigners have complained of “sweatshop” conditions in many of the Asian plants producing Nike products. Lack of ownership, it seems, does not bring freedom from responsibility.

Kết quả (Latinh) 1:

RESPONDEO dicendum quod non semper infimus pecunia
et nova mercatis inferioris tariffs aperiens ad aliena obsideri arbitrium non, interdum eget vestibulum quam ut in eodem ordinetur, dicit Nikki Tait Visit quis toy superstore occidentali, et maxime basic products dicet: "Factus est in Sinis" aut, si forte, vel elit Indonesia. Donec id est Lego partem pervenire. Subito, facilius cognosci queat Daniae US ut aut Germania terra originem. Apparet, merito et orbis comitatu regio multitudo in foro venderet et mensurantis global foro partem termini, ponat facultas productionis ubi sumptibus sunt infima. Lego quod in secreto possessores Danorum comitatu suo ad annos conuenerunt in Europa et vestibulum elit, et quale consilium satis arguit hoc maxime necessaria. Lego enim sumptus est, pauca de ratione productionis imago. Et vestibulum ejus, unde haud ordinandis ipsum dolor abierunt? Past duobus adipiscing turpis sit declaratio propter plures causas. Uno modo, per multum orbis claustra artis descivisse durus. Simul rhoncus nova mercatis - praesertim in Asia et Europa orientali - aliena obsideri apertum. Hoc multo magis possibile est global productio. Sed orci herbis plurimis opus redegit. Markets prius postularet, quod loci productio facilities, quia importat lezdam eget fecit nimis sumptuosus - nunc suppleri potest, constat. Neque plane in hoc recens environment perquam liberalis, manufacturing basic costs fiunt amplius. Sunt autem termini cost agitatae aditus ad explicationem tantummodo. Multis turmas suas super acquisitione per aliquot annos nunc productio rationem, quam ex proposito itinere. gratuita aliud problema subiicitur sibi ipsi mutationis celeritas, quae hodie Indonesia, ut crastina die Hong Kong. Hoc addit aliquid ad global ratio exsistit decernendo dignissim dolor. Veritas est, quod opus est, vestibulum negotiis cogitare, quam cito potest vello plug? Manipulos hac dirigitur per id quod dicitur "pars figura" exemplari. In hac parte officium est eligendi a numerus of tellus vestibulum longius tempus secundum quod est in re, quae sunt bases, et eorum augmentum plantarum cum inferioribus-peritus coetus, quae potest magis de facili moveri inter eros. In availability of idoneis elit et expondendum cum investment consilia sunt facta. Sit productum innovatione arcte inter vestibulum et humilis-sumptus et inposita nimis focus coetus operationes tendit pati productum innovatione. num forte haud fortissimum argumentum esse faciens eget nulla. Outsourcing amet productionis aliis dat multitudinem sapit, convenit et cum haud amet. A negotium est melius ut impleret id quod positum est in diversas regiones diversificantur products foro, et potest probabiliter citius accommodare ad mutandam rebus cost. Haec operational commoda veniunt in addition ad beneficia outsourcing oeconomus, ut inferius caput poni. Sed non potest esse casus in illa. Fortasse non outsourcing flecte comitatu exemplar melior Nike, ludis calceamenta group. In charta, eius consilium eiusque calciamenti subcontracting productio spectat ad loci maxime officinis sensibili. Sed versa est in his rebus publicis relationibus malum in annis, ut iura humana stipendia questi "sweatshop" de iis quae sunt in multis Asian herbam facientem Curabitur consequat. Defectum proprium videtur, officiorum non liberari.