Problem
Changing the Offshoring Game
For years companies have offshored much of their manufacturing to China because of the low labor costs there. However, such moves, while financially beneficial, have had some negative side effects. One of the more important is the loss of intellectual property, as the Chinese government often requires companies to partner with Chinese companies forcing them
to transfer their technologies. In addition, companies doing business in China have often found their intellectual property stolen. As the Trump administration laid tariffs on a number of goods imported to the United States from China, companies began rethinking their supply chains. Rather than setting up all their operations in China, now companies seek to set up factories in several different countries in order to reduce the political and economic risks that come with concentrating too much in one country.
For instance, Yeti Holdings Inc. (makers of Yeti coolers and mugs) had already been modernizing its supply chains by reducing its dependency on China and building more capacity in the Philippines. When it discovered that some of its products were on the list of those targeted by the tariffs, it was able to mitigate the negative consequences by simply shifting more of its China production to the Philippines. While long and costly, such shifts are perceived to pay off. Yeti CEO Matt Reintjes says, "Sometimes China is the easiest answer, but sometimes it's not the best one for the long term." The pandemic exposed problems with global supply chains. When countries began locking down, it made it difficult to get products from across the globe. Some medical items (protective medical facemasks, generic drugs, etc.) and nutritional products (e.g., vitamins) were largely produced in China. In some cases the Chinese government shipped only what they did not need for their own citizens, creating shortages in the U.S.
Task
• How do global supply chains make the task of managing people more challenging?