Whole Network Most Recent TOP10 Interviews Point of view Products Technology

 

Offshoring decisions as a function of supply chain fuel cost

Filed in archive Research by ehsan on August 30, 2008

Some while ago I wrote a piece on the MIT's Dr. Simchi Levi research on simulation of supply chain fuel cost. He was showing that in the case the fuel cost increase to high levels (around $200), it makes sense to draw back from outsourcing to Asia or hold more inventory.

Offshoring decisions as a function of supply chain fuel cost



In this post I've brought another relevant graph based on his research (taken from SC Digest) which formulates the offshoring decisions as function of the cost to move the warehousing and logistics infrastructure and also logistics cost (mostly influenced by fuel cost).

The matrix facilitates the decision making process for finding the optimum network analysis by considering two variables in a simple 2-by-2 matrix. First, are logistics costs to move products from Asian factories as a percent of total supply chain costs high or low? Second, are the costs or barriers to move infrastructure from Asia high or low?
While each company may define the boundaries differently, such a matrix can be used to visually assess where a company's products fall. For example, products with high logistics costs as a percent of total costs and with low costs or barriers to moving the infrastructure are the prime candidates for moving sourcing back from Asia. Conversely, products with low logistics costs and high costs to move infrastructure likely won't make sense to reconsider.


Advertisement




Permalink: Offshoring decisions as a function of supply chain fuel cost
Tags: scm  supply  chain  management  fuel  cost  offshoring  simchi  levi  2008  supply+chain 

Trackback: http://www.creative-weblogging.com/cgi-bin/mt-tb.pl/132725



Advertisement


Advertisement


RSSrss   | See all blog subscribe options
Googlegoogle   |   What is RSS?
Yahoo!yahoo
AddthisAddThis Feed Button
BloglinesBloglines
Newsletter

Use the search to look for other interesting posts

 
  • Advertise with us

  • Learn more about our advertising options or email advertising - at - creative-weblogging.com or give Luis a call at +1 (650) 331 8047.


  • Testimonials

  • Frankly, the site is what TechPlanet Asia is collectively aspiring to. Ehsan covers indepth issues pertaining to the global transportation, logistics, supply chain and RFID industries, and also has an impressive blogroll. Highly recommended! ---- Raoul Le Blond of SCMTech Planet Asia

    I am a regular reader of your blog and it helps me learn & understand the domain of SCM and industry better ---- Rajiv Renganathan, Manhattan Associates
  • Other blogs in the same channel in the Creative Weblogging Network







 
Tagcloud: Basics Best practice Book Review Education Employment General Green supply chain Green supply chains Guest Column Implementation Interviews Market Overview merger and acquisition News Partnerships Point of view Practical Tips Products Research Special Events Sponsored Post Supply chain video Sustainability and supply chain Technology