“Recently, rising energy prices, wage inflation and customer demand for shorter lead times have led many U.S. companies to consider “reshoring” the production of goods bound for domestic markets back to America,” writesIndustry Week (Aug.5, 2014). But getting it right can be tricky. A decision to reshore needs to consider the following 7 issues:

1. A focus on total costs instead of unit costs: By focusing on unit costs instead of the total cost of ownership – which includes costs such as transportation, intellectual property risks and inventory carrying costs – manufacturers are overestimating potential savings from overseas operations by 20%- 30%.

2. Invest time to Continue reading →

Airline representatives at U.S. airports increasingly aren’t employees of the carriers they represent, reports The Wall Street Journal (July 8, 2014). United Continental Holdings, for example, will soon outsource jobs at 12 airports to vendors who will perform the duties at lower cost. The change impacts 635 workers in areas including check-in, baggage-handling, and customer service. Part of a broader effort by United to cut costs, it reflects how big U.S. airlines are using vendors to handle key jobs at most airports, a trend that can reduce expenses but also risks hurting customer service.  American, Delta, and Alaska Airlines are among the carriers that already outsource a large share of this work.

Passengers often don’t realize the check-in agents they deal with at airports don’t work for the airline they are flying. Often, at smaller airports, the same workers may represent multiple competing carriers. Continue reading →