Retailers live or die by a simple creed: stock products that sell, and do not store the products that do not sell. In the North American and European companies to source more of its goods from China, the risk of getting it wrong sharply. Some companies - including Wal-Mart, Home Depot, and Toyota - are having second thoughts about their Chinese-search strategies, and are either refining their North American supply chains and even retreating from China. The authors argue that a firm emphasis on reducing the time and variability in China supply chain anchor serving North America and Europe can help companies to significantly reduce their costs, increase their margins, and create competitive advantage. They show why the North American and European companies have to look closer to home, where labor costs penalty (with respect to labor rates in China) is more than offset by the excellent performance of the supply chain, which is much less variable and does not depend on the port and on the surface of the restrictions bandwidth.
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by George Stalk, Jr., Kevin Waddell Source: Rotman School of Management, 5 pages. Publication Date: January 1, 2007. Prod. #: ROT037-PDF-ENG
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