M4 A1.docx - Module 4 Assignment 1 The Implications of Outsourcing and a Global Supply Chain It is relatively easy to look at obvious production costs

M4 A1.docx - Module 4 Assignment 1 The Implications of...

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Module 4 – Assignment 1 The Implications of Outsourcing and a Global Supply Chain It is relatively easy to look at obvious production costs, create a spreadsheet, and decide to start production in China. However there are many hidden unknowns in the supply chain that make it a far riskier venture than it is on the surface. Terrance Burton (2013) lists several variables that add to the uncertainty of supply chain design decisions: Oil prices have tripled since 2000, making cargo-ship fuel much more expensive. Wages in China are now five times what they were in 2000 and are rising at an annualized rate of about 20 percent. Some American labor unions have learned a painful lesson about today's economic reality, and they know they must become globally competitive. The natural-gas boom in the United States has dramatically lowered operating and facility costs. In Asia, meanwhile, natural gas rates are four times those in the United States.
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  • Fall '12
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