What to Offshore, What to Produce at Home? A Methodology

Abstract

Abstract. Ever-increasing cost pressure and global competition has forced many Western manufacturing companies to offshore some or all of their production; i.e. to establish a manufacturing operation/facility in a low-cost country that replaces a facility in the country of origin. Literature concludes, however, that businesses do not make offshoring decisions in a systematic manner. This emphasizes the need for models, methodologies and tools supporting companies in making sound offshoring decisions. This paper proposes such a methodology for one of the crucial questions many offshoring companies face: For which products should production be offshored, for which should it be kept back? The proposed methodology consists of five steps: (1) Identify constants and variables (scoping); (2) Determine and characterize product groups; (3) Perform a strategic (qualitative) analysis; (4) Perform a financial (quantitative) analysis; and (5) Take a decision. The paper briefly describes each step, with a focus on the first three steps.

A Structured Outsourcing Procedure

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What is a ship design firm, really?

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