The Deception of Offshore Sourcing Part 2

Sep 21, 2020

by Brian Imbler, CEO The Sales Bridge  

What are the hidden costs of offshore sourcing?

1)  The Unquantifiable cost of stolen intellectual property and product replication
(China’s IP theft greatest transfer of wealth in history)

2)  Cost of dealing with inconsistency between production batches

3)  Cost of critical language translation.

4) Cost of delayed deliveries due to reduced supplier control

5) Cost of internal personnel expansion (engineering and procurement) required to manage a major offshore supplier

6) Cost of travel to ensure the supplier’s facilities and parts remain compliant and problems resolved

7)  Cost of higher employee turnover due to stress and reduced workforce satisfaction

8) Cost of lost business due to product availability interruptions.

9) Cost of fees paid to customers due to late product shipments.

10) Cost of dealing with quality problems

11) Cost of Pollution from cargo ships burning crude oil for the 7,000 mile transit

(20 cargo ships create as much pollutants as all of the cars in the world COMBINED)

 

Cost of… Cost of… Cost of… It keeps going, and going, and going. 

 

 

An example is a customer who had been purchasing a complex sub-assembly for several years from us (we also supplied quite a bit of free manufacturability and development support for their products).  After a supply chain management change within their organization, they decided to go with another supplier with offshore capabilities who could save them a few bucks per unit.  It only made sense for them to migrate the work to a company with offshore capabilities with the hopes they could add a little to the bottom line…  Right?  Not so much.  Like the other customer, we saw their business quickly diminish, orders stop, and we didn’t hear from them until about 6 months later when they called and asked us to start building their products again, and very quickly if possible so they can have products to ship.   

We have watched a number of companies go down this path of attempting offshore sourcing, only to return after their cash flow and profits took a hit.  How can US manufacturers convince customers to keep production in the US?  We can make the sales pitch, but the allure of a low unit purchase price is often too tempting and our argument regarding the hidden costs is typically dismissed as being biased.  It sometimes comes down to a trial by fire and the best thing we can do is be ready to douse the flames and get them back on a better track if offshoring inflicts too much pain to the pocketbook. 

All of that said, where offshore sources represent competition outside our borders, there is an imminent and growing danger from within.  To understand this threat, we need to first understand what originally made this country great.  The documents that declare and grant our nation’s independence affirm that we are a country built upon liberty, justice, capitalism, democracy, and a dependence on God.  This dependence on God is not to be confused with general organized religion, but rather is speaking to a specific relationship that is clarified in the Paris Peace Treaty of 1783 which states our very independence as a nation is granted in the name of the most Holy and undivided Trinity (God the Father, Christ, and Holy Spirit).  It is no coincidence that we as a nation have enjoyed tremendous freedoms, opportunities, innovations, and prosperity across all demographics.  This right to succeed is systemically granted to ALL citizens of our country, but we individually must put in the required effort to overcome the often many challenges in achieving it.  I am not suggesting there is anything magical about Made in the USA, but there is something very unique, powerful, and expansive about our founding ideals which are based on Biblical principles.

Contrast this to other countries that have opted for secular ideologies which seek to eradicate freedoms, stifle innovation, and exchange liberties with a forced dependence on  government, even under a false promise of improving social justice.  We have witnessed time and again the atrocities and degradation of human life under socialism, marxism, and communism.  Yet, sadly this way of thinking has become the platform of the American Democrat Party as documented in the Biden-Sanders Manifesto  and further evidenced in the liberal riots and anarchy across our nation.  We are also seeing an unprecedented level of lack of truth in journalism and blatant attempts to rewrite our history in order to fit a liberal narrative, following the playbook of Karl Marx.  It only makes sense that if Made in the USA is going to continue, we have to do more than compete with offshore sources, but must also as individuals and as a united people freely turn back to our founding convictions, holding to the truth that all people of every race are Created equal in the image of God, while firmly opposing those who would otherwise eradicate our liberties and regress our country into yet another physically and spiritually impoverished secular state.

 

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