You’re a company that has been outsourcing for the last 10 years.  This makes good business sense, since you can’t find local or domestic sources that can make products or provide the services you need.  Also, the savings of outsourcing can be substantial so this increases your revenue and is good for your shareholders.

Then, you get tweeted: President Trump calls your company out as being UnAmerican for outsourcing jobs.

The impacts of Trump’s tweets are immediate and can be profound:

• Trump assailed high drug prices and the stocks of the nine largest pharmaceuticals fell $25B.
• Trump jumped on GM for producing cars in Mexico and now is evaluating its sourcing to Mexico. (The Hill, January 19, 2017)

The outsourcing business model is being disrupted by Trump with his jobs and America First campaign.  What’s a company to do?

THE RATIONALE FOR OUTSOURCING

The rationale for outsourcing and offshoring is based on good business sense.  It goes something like this:

A company focuses on its core competencies such as branding, product design, and marketing.  All other non critical work is outsourced or even offshored.  This has been the primary business model for 20 years of globalization.

Now, this is being challenged or even refuted by Trump.  This is a game changer that is challenging the conventional wisdom of globalization and offshoring.

It’s now all about risk.

SO WHAT TO DO?

At first, companies are using public relations to react to the negative publicity, such as using social media to counter Trump’s tweets.  This is called managing optics.  This is the easier option.

The harder challenge is to review and possibly adjust business models based on outsourcing and offshoring assumptions.  The political and reputation risks to a company are simply too large.

The challenge for almost all companies is how to adjust an offshoring business model that has worked for 20 years.  And, the model has to be changed quickly and resolutely.

What needs to be done?  Here are critical supply management issues that are challenging many companies:

• What is our new business model in this time of uncertainty?
• What do we outsource or keep internally?
• If we have to outsource, can we source domestically?
• What domestic suppliers can we find to do what we need done?
• How do we onboard these supplier quickly so they understand our requirements?
• What metrics will we use to manage these suppliers?

Finally:  How do we set up a Supply Chain Risk Management program quickly?

Bio:

Greg Hutchins PE and CERM (503.233.101 & GregH@QualityPlusEngineering.com)  is the founder of:

CERMAcademy.com
800Compete.com
QualityPlusEngineering.com
WorkingIt.com

He is the evangelist behind Future of Quality: Risk®.  He is currently working on the Future of Work and machine learning projects.

He is a frequent speaker and expert on Supply Chain Risk Management and cyber security.  His current books available on all platform are shown below: