Panel: Globalization: The Pros & Cons of Off Shoring

Thursday, June 26, 2008 - 10:30 am - 11:30 am

Track: Future Trends & Issues

Session Abstract

As supply chains globalize, companies continue to evaluate alternatives for off-shoring activities. The term ‘off-shoring’ is used in various situations and may take on slightly different meanings.  Therefore to effectively discuss the ‘pros’ and ‘cons’ of off-shoring, defining what is being considered for ‘off-shoring’, the location of origin and destination for such ‘off-shoring’ and the risk and benefits associated with the change must be considered.  In short, business must understand the work, the impact of the change and the new operating model.

As businesses evaluate ‘off-shoring’ manufacturing, services or sources of materials to a location offering lower costs, it is imperative to clearly define the scope of work, what needs to change and the value proposition.  There is always risk associated with this change; but if a company decides to proceed because benefits outweigh the risks, the key challenge is management of change to effectively and efficiently implement a ‘new way’ of doing business.

Companies that send work offshore could cut costs by as much as 25-50%, when business/SC processes are transformed to take advantage of the ‘new’ business model.  But without work redesign to exploit automation, manage risk and take full advantage of the new environment's potential, companies risk sub-optimization, business disruption and lower than expected benefits.

DuPont has several examples of off shoring and how these efforts have successfully provided a competitive advantage and changed the way we do business. However managing the changes required significant effort, focused resources, process systems and governance redesign and leadership alignment.  Examples include changing raw material sources to emerging economies, outsourcing selected transactional processes to India, and working with service providers on their outsourcing initiatives that ultimately reduce our service costs.

Learning Objectives:

•          Examples of work – key services, commodities.

•          Elements for consideration/decision making

•          Liberating Value

Learning Outcomes:

•          Pitfalls

•          Success factors

•          Key Takeaways

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