When a company takes its factory and moves it from a location here in the United States to a foreign country such as China is called off shoring. Businesses will make this move to not only decrease costs in labor, but to decrease their costs in health care, taxes and the cost of property. The cost of living in other countries is less than that of the United States, providing savings to a business that chooses to operate off shore. Businesses are finding huge cost savings utilizing off-shoring. Those cost savings are essential for a small business to turn a profit.
Off-shoring differs from out-sourcing in that the actual factory is moved to a foreign country. Out-sourcing is utilizing labor/services that are contracted outside the United States. The concept of cost savings in labor/services is the same in out-sourcing and off-shoring, but the actual location of the company’s factory is different. Out-sourcing is taking a function that is currently being completed by a business, such as research or taxes, and employing someone in another country to complete that task at a lower cost and then reintegrating it back into the business. Off-shoring is a company taking their factory and moving it to a foreign country to produce the same product at a lower cost.
Freidman states that a supply chain is a large collaboration of suppliers, retailers and consumers to create the best value. It is the ability of a retail company to collaborate with suppliers world-wide to obtain a product at a much lower cost and provide their stores with the product in a very timely manner. There are many elements involved in creating an accurate, efficient supply chain. A retailer needs to be able to locate a supplier that can provide the desired product at a much lower cost as well as lower shipping costs. The company must then employ people to manage the supply and demand of the products. Development of a system that can keep up with product demand in several locations and be able to get those items delivered timely to keep the shelves stocked and the store running smoothly takes careful planning.
Walmart has developed one of the most successful supply chains. It has created a supply chain that can evaluate what product is in demand at which location and ship that product to that location quickly. It has the ability to adjust what is being shipped to a certain location to prevent overstock. If a product is not being utilized in a specific location that product is sent to a different location in which it is in demand. Their system keeps overstock to a minimum and prevents them from losing profits. They know what is selling in a particular location and when the supply is low and when a particular store needs a shipment. They have a finely tuned supply chain that helps them operate very efficiently and at a much lower rate.
Google.com is a large information system that can refer a customer seeking information about an item, particular service or product to a business located near that customer. Google.com can refer the customer to several different advertisements for businesses that provide the requested service/product that they are in search of. The consumer reviews the options given for their request, and chooses which company fits their needs. Google.com is a form of advertisement for those businesses, providing businesses with access to potential customers. Google.com also has the ability to adapt to their users and what they are in search of. This gives the consumer great power to evaluate the information they are given, what they want and what price they want to pay.
I have to agree with Freidman that one of the largest flatteners is Google.com and other search engines like it. I personally use search engines on a daily basis and I am amazed at the information that is available at our fingertips. These search engines have opened many doors that would otherwise be inaccessible.
I am fascinated by the business genius of U.P.S. and their ability to expand beyond just shipping products. U.P.S. not only is a delivery company, but they have expanded their company to repairing computers and assembling products at their warehouses. They have collaborated with many businesses seeking their expertise in shipping, repair and production. They have collaborated with businesses such as Toshiba and Ford Motor Company. I think what U.P.S. has done is simply amazing and a fine example of forward thinking.
The only item discussed in this section that I disagree with is the off-shoring. I understand that it may be a great opportunity for American business now, but what impact will off-shoring have on the Unites States later? Will off-shoring give China the advantage over the United States? I feel that we will be hurt by off-shoring to China. It has the potential to give Chine an edge on the United States. The United States is losing precious jobs to other countries, such as China, because it costs a company too much to employ an American. This is very concerning to me as we are giving away our job opportunities. There may be a cost advantage now, but at what cost to the later generations of Americans? I sincerely hope that America can remain strong and that Americans can remain employable.
Business as we knew it in America has been expanded and we have been given many options to operate a successful business. The development of the computer, the internet, off-shoring, out-sourcing, and highly efficient supply chains have greatly increased a business’ potential for success.
I was also amazed to learn about all the different faucets of UPS, if only they could look under the hood of the United Postal Service.
ReplyDeleteI tend to agree with you on your comments regarding China, however their is also another avenue to look at. By cheaper prices in the country for consumer goods made in China also puts more money in our pockets to spend on other things, which can lead to other jobs here. I'm no economist, but I would think this helps out.
ReplyDeleteI second your concerns about off-shoring to China. I am concerned more with the idea that if China and the U.S. become enemies to the point where the thousands of U.S. businesses that operate in China are kicked out, that would have dramatic effects on the worldwide economy. On that same thread, perhaps the benefit of having so many U.S. businesses in China that benefit homeland China is such that China would never consider making enemies with the U.S. When China reaches the point where its people are wealthy to the point that they can survive on their own without U.S. businesses, perhaps then China may truly be a force to be reckoned with industrially and economically, as they will be inventing the products the world uses.
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