The Case for Backshoring – Returning to the Fold
Posted on January 30, 2010 by Jeffrey Tobias in Globalization, InnovationFor years, the NCR Corporation simply followed the pack. Like many other large U.S. manufacturing companies, in the past couple of decades the maker of automated teller machines (ATMs) relied heavily on offshoring and outsourcing to trim factory costs. By making much of its equipment in cheaper offshore locations in the Asia/Pacific region, and by hiring Singapore’s Flextronics International Ltd. to make other equipment, NCR could slash hundreds of millions of dollars in plant expenses and be reasonably certain that its ATMs met quality standards.
But recently, NCR has rejected this strategy — at least to a degree. In 2009, the company decided to move its most sophisticated lines of ATMs from its plants in China and India, and from a Flextronics facility in South Carolina, and instead manufacture the machines in Columbus, Ga., not far from the NCR innovation center, where its new technology is on display. The reason: The company was concerned that outsourcing distanced its designers, engineers, IT experts, and customers from the manufacturing of the equipment, creating a set of silos that potentially hindered the company’s ability to turn out new models with new features fast enough to satisfy its client banks. “I think you’ll see more of this occurring,” says Peter Dorsman, NCR’s senior vice president in charge of global operations, who says he has been contacted by dozens of U.S. companies studying whether they should make similar moves. “You’ll see a lot more people returning manufacturing to America.” Read entire report.
Martin Stewart-Weeks says:
Post Author January 30, 2010 at 10:30 pm“The reason: The company was concerned that outsourcing distanced its designers, engineers, IT experts, and customers from the manufacturing of the equipment, creating a set of silos that potentially hindered the company’s ability to turn out new models with new features fast enough to satisfy its client banks.”
What does that say about the much-vaunted capacity of the new platforms of communication and collaboration, including of course the Internet itself, to create distributed models of collaboration which are meant to avoid the silo-creating risks of distance? Is the NCR move an admission that real collaboration is only possible as a function of physical proximity?
plannetplc says:
Post Author February 19, 2010 at 7:47 pmOutsourcing the help desk to India and other cheap-labour country might be financially convenient from the point of view of decision-makers, but are the end users happy? Might not be so convenient after all… http://plannetplc.wordpress.com/2010/02/15/do-you-really-want-to-lose-interface/