Lecture 7

Question 1

How can manufacturing serve as a competitive advantage in global supply chains?

Answer 1

• Aligns production capabilities with supply chain and competitive objectives.
• Strategic roles of foreign factories evolve from cost-driven units to innovation hubs.
• Enables faster responses to market demands and incremental innovation.

Question 2

What are the strategic roles of foreign factories, according to Ferdows (1997)?

Answer 2

1. Offshore Factory: Focused on cost-efficiency in low-cost regions.
2. Source Factory: Contributes to supplier selection, production planning, and logistics.
3. Server Factory: Supplies specific regional or national markets.
4. Contributor Factory: Acts as a hub for product/process innovation and supplier collaboration.
5. Outpost Factory: Gathers market intelligence.
6. Lead Factory: Develops new processes, products, and technologies for the entire company.

Question 3

What is the difference between offshoring and reshoring?

Answer 3

• Offshoring: Relocating production to low-cost countries for cost advantages.
• Reshoring: Moving production back to domestic markets to improve responsiveness, mitigate risks, and reduce hidden costs.

Question 4

What are the four types of reshoring decisions, according to Gray et al. (2013)?

Answer 4

1. In-house Reshoring: Domestic production within the company.
2. Reshoring for Outsourcing: Partnering with domestic suppliers.
3. Outsourced Reshoring: External providers manage reshored operations.
4. Reshoring for Insourcing: Bringing previously outsourced activities in-house.

Question 5

What are the benefits of reshoring?

Answer 5

1. Customer Proximity: Faster response to market demand and shorter order cycles.
2. Supply Chain Resilience: Reduced reliance on extended supply chains.
3. Sustainability: Lower carbon footprints due to localized production.

Question 6

What are the challenges of reshoring?

Answer 6

1. Workforce instability and skill gaps.
2. High initial costs for establishing local production.
3. Difficulty rebuilding local supplier networks.
4. Customer resistance to higher prices.

Question 7

What did Ferdows (1997) conclude about leveraging foreign factories?

Answer 7

• Factories can evolve from cost-driven units to innovation hubs.
• Deliberate investments in capabilities (e.g., product development) enable factories to add strategic value.
• Aligning factory roles with supply chain goals enhances competitive advantage.

Question 8

What did Gray et al. (2013) emphasize about reshoring?

Answer 8

• Reshoring is a strategic re-evaluation rather than a reaction to offshoring.
• Hidden costs and risks often drive reshoring decisions.
• Effective reshoring requires total cost analysis, sustainability alignment, and robust governance.

Question 9

What insights did Shih (2014) provide on reshoring?

Answer 9

• Challenges include workforce skill gaps, supply chain realignment, and financial constraints.
• Successful reshoring requires investment in skills, proximity between design and manufacturing, and supplier ecosystem development.

Question 10

How did Adidas use reshoring for competitive advantage?

Answer 10

• Adidas established ‘Speedfactories’ to leverage automation and bring production closer to key markets.
• Objectives included improving responsiveness to customer demand and enhancing brand differentiation.
• Challenges with scalability led to eventual closure.

Question 11

What is the role of proximity between design and manufacturing in global supply chains?

Answer 11

• Tight integration between design and manufacturing enables faster adjustments to market changes.
• Promotes incremental innovation and shorter lead times.