offshoring & reshoring

• What is offshoring


  s the relocation of business activities from the home country to a different international location. It is the changed international location of where the business activity is performed that is key to understanding offshoring.
• The Difference between Offshoring and Outsourcing

  • Offshoring is about WHERE the work is done

  • Outsourcing is about WHO does the work
• Key Reasons for Offshoring

  • To access potentially better skilled & higher quality supply

  • To makes use of existing capacity overseas

  • To take advantage of free trade areas and avoid protectionism

  • To make it easier to supply target international markets (where it is important to be located in, or near to, those markets)
• Drawbacks to Offshoring


  • Longer lead times for supply & risks of poorer quality

  • Implications for CSR (harder to control aspects of operating long distances away from the home country)

  • Additional management costs (time, travel)

  • Impact of exchange rates (potentially significant)

  • Communication: language & time zones
• Reshoring


  reverse of offshoring. it involves a business returning production or operations to the host country that had previously been moved to a different international location
• Key reasons for reshoring

  • Greater certainty around delivery times

  • Minimising risk of supply chain disruptions

  • Reducing the complexity of the supply chain

  • Making it easier to collaborate with home-based suppliers

  • Getting greater certainty about the quality of inputs and components

  • Recognising that the cost advantage of producing or sourcing overseas is not as significant as it used to be
• Outsourcing


  The transfer of business functions from being done within the business to be provided by a supplier