A Look Inside Outsourcing Decisions at Tokyo Global Forum

manufacturing-line-airplane

Global companies struggle with  decisions on how much to outsource. Too little means an organization may lose the pricing advantages that can come with using competitive providers worldwide. Too much — or the wrong kind of outsourcing — and quality and knowledge management can suffer.

A panel at a recent Wharton Global Forum in Tokyo titled, “Global Supply Chain Management: Outsourcing, Re-shoring, and Near-Shoring,” looked at the reshaping of the global supply chain, and how companies choose where and whom to source from in a fast-changing environment. During the discussion, led by Wharton professor of operations and information management Morris A. Cohen, the panelists suggested that the cheapest solution is not always the best, and that the architecture of supply chains can vary widely depending on the industry and products involved.

Boeing’s supply chain evolves from extensive research into customers and the environments in which they operate, said Beth Anderson, a Boeing vice president. “We go through the entire cycle of designing the airplane and designing the production system, and understanding who our customers are going to be and how we’re going to support [the aircraft] once it goes into service.”

Boeing’s main customer base has evolved since 20 years ago, when 75% of the company’s production took place in the United States and Europe, with the rest happening elsewhere. Now, just 25% of Boeing’s backlog is in its traditional markets in the U.S. and Europe, with 75% in fast-growing economies like China and India. Thus, Boeing’s vast supply chain is evolving to fit its changing market and advancing technologies.

Originally Published   July, 17th  by Knowledge@Wharton 

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