Shifting manufacturing from China to other parts of Asia as costs rise

An article in the Wall Street Journal (May 1,2013) describes decisions by Coach to reduce its manufacturing in China to 50% in 2015 (from 80% in 2011), by Crocs to reduce its footwear manufacturing to 65% this year from 80% in 2011 and by Uniqlo to source 60% in China soon. Rising wages in China and better prices in other locations such as Vietnam and India are claimed to be the reason. Are such sourcing choices, that diversify supply bases across Asia, while increasing coordination costs, justified ? With recent mishaps in Bangladesh, will the risk associated with sourcing in emerging locations with poor standards require more oversight, thus increasing costs overall ? What new roles will retailers have to assume to ensure an ethical supply chain ?

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , , , . Bookmark the permalink.

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