Shanghai or Charlotte?: The decision to outsource to China and other low cost countries

Abstract

The decisions of whether and how to outsource to low cost countries (LCCs) are often very troubling and complex. The popular business press is full of success stories and sometimes shrill stories of failure and of jobs lost to other countries. Managers need to cut through the noise and understand how to approach these issues from both strategic and tactical perspectives. By tracing the experiences of four manufacturing companies, introduce a framework for the outsourcing decision process - examining corporate strategy, operations strategy, total landed cost, and risk. Throughout, we illustrate the framework with examples. We conclude with some brief comments on the distinction between low cost country (LCC) and domestic sourcing.