Tuesday, June 9, 2009

The charm of outsourcing is eroding in USA

Kristie Kelly, a Los Angeles based wedding gown designer, removed 40% of her business operations from mainland China to USA in the last four months. Kelly also teamed up with Walt Disney to promote and sale her low priced gowns. She is selling her products through the Disney Fairy Tale Weddings Collection. The gowns sold in these stores cost $3,800.

A famous wedding-gown designer, Kristy Kelly, used to produce her high-end gowns in USA and outsourced the low-end gowns to mainland China. Now, 40% of that production work is done in a factory based in Nashville, Tennessee. By the middle of this year, Kristy would remove another 40% of her operation in USA.

Outsourcing has certain advantages but it has its disadvantages as well. Very often due to large distance, the company that placed orders can not keep an eye on the production process. Then there is the rising shipment cost and language barrier which makes outsourcing quite complicated especially, for mid-size and small business owners like Kristie Kelly. Kelly is happy with the present arrangement. The manufacturing facility is at a short distance which makes it easy for her to keep track of her production and it would also cut down the shipping cost.

Saving the economy is not only the top priority of the US government but also business owners like Kristie Kelly who previously resorted to outsourcing to gain competitive advantage in the market. As more and more small and mid-size business owners like Kristie Kelly would remove their businesses in near future, does this mean that the high point of outsourcing is over?

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(This entry was first published in February 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)

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