© John Van Hasselt/Corbis these suppliers are located in thousands of cities in many countries, finding them is difficult. Li & Fung, based in Hong Kong, is one broker that has helped hundreds of major U.S. companies to outsource their component or assembly opera- tions to suitable overseas suppliers, especially suppliers in mainland China. 11 Although outsourcing to take advantage of low labor costs has helped many companies perform better, in the 2010s its risks have also become apparent, especially when issues such as reliability, quality, and speed are important. Several years ago, General Electric moved the production of its hybrid water heater from China to Kentucky due to rising wages in China and increasing transportation costs. Moving produc- tion back to the United States also gave the com- pany more control over product quality. When all the savings were taken into account, the Kentucky plant was able to produce a bet- ter product at a lower cost than the plant in China. 12 Apple also brought the manu- facturing of its Mac Pro from overseas to Austin, Texas. 13 On the other hand, some companies do not outsource manufacturing; they prefer to establish their own assembly operations and factories around the world to pro- tect their proprietary technology. For example, most global automakers own their production operations in China to retain control over global decision making and to keep their operations secret. An interesting example of how organizations have tried to control what happens in their supply chains is discussed in the “Managing Globally” feature. How much water did it take to manufacture the outfit you are wearing right now? The textile industry has a huge water footprint. First, it takes water to grow cotton, the material that accounts for 90% of the textile industry’s use of natural fibers. 14 One estimate suggests that nearly 400 gallons of water are needed to produce each cotton T- shirt. 15 The farming of cotton accounts for 2.6% of annual global water usage and is the largest water consumption factor in the supply chain of the textile industry. 16 And it’s not just quantity. Cotton production has a direct impact on water quality through the use of pesticides, herbicides, and fertilizers. Second, problems continue beyond the growing of raw materials. The tex- tile industry uses and pollutes water while dyeing fabrics. It can take more than 6 gallons of water to dye one T-shirt. The polyester apparel industry alone uses 2.4 trillion gallons of water a year. 17 The process of treating, rinsing,
and dyeing fab- ric accounts for about 20% of the world’s industrial water pollution. 18 Dye houses in China and India have been accused of overusing local water supplies as well as dumping toxic wastewater into local waterways.
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- Summer '17
- Mary Kovach