APICS is the premier professional association for supply chain management.

Considering the Total Cost of Offshoring

by APICS Staff | N/A 2012 | 12 | 10

Many manufacturers are considering the decision to cease overseas production and return to domestic manufacturing. Rising wages in countries such as China are not the only reason for this, as an article on CFO.com explores. Rather, the total cost of doing business offshore needs to be considered, which includes the following costs that may not always be readily apparent. 

Logistics. Even experienced supply chain and operations management professionals might overlook some of the potential risks and hidden costs of doing business overseas. Sources of less-than-obvious costs include freight forwarding, duties, insurance, labor disruptions, fuel price volatility, expediting, and customs inspections.

Inventory. Managing inventory abroad is deceptively challenging. The levels required to support offshore sources almost always are higher than estimated. Disruptions such as fluctuating customer demand, supplier delays, weather, and customs seizures can greatly affect lead times, requiring that additional inventory be kept as a buffer.

Quality. While it’s usually not true that goods produced offshore are of lesser quality than domestic goods, the greater production distances means rapidly resolving quality issues likely requires additional costs.

Other potential hazards when calculating the total cost of offshore production include language and culture barriers, time zone differences, and vastly larger production and inventory sizes and complexity.

Report Examines the Current State of US Manufacturing

The Brookings Institution, a nonprofit public policy research organization, has published a report on the current state of US manufacturing, which examines the industry’s changing nature in the last few years and current trends in manufacturing geographies. The Washington Post breaks down a few of the survey’s most interesting findings. 

Manufacturing jobs are on the rise since 2010, but the 350,000-job gain is very modest in comparison to a three-decade slide, when the United States lost 7.9 million manufacturing jobs since 1979.

The nature of manufacturing also is shifting, as food production has become the number-one manufacturing job. Metal products, electronics, machinery, and motor vehicles and parts round out the top five. 

The majority of manufacturing jobs__nearly 80 percent__are clustered in large metropolitan areas. Plus, certain cities tend to specialize in a particular type of manufacturing. The jobs most likely to be located in cities are computers and electronics, transportation equipment, low-wage manufacturing, chemicals, machinery, and food production. 

Finally, the Northeast and Midwest no longer appear to be shedding jobs to the South and West, as they were in the 1980s and 90s. During the recession, all regions lost jobs at roughly equal rates, and since 2010, the Midwest is adding manufacturing jobs at twice the rate of the rest of the country.

US Helium Supplies Dangerously Low

A 1996 law is at least partially responsible for a looming helium shortage in the United States, the Washington Post reports. A helium shortage would affect more than party supply stores, as uses for the gas are wide-ranged and include medical scanners, welding, and the production of optical fibers and modern televisions. 

Widespread helium use can be traced back to the 1920s, when the government created a national helium program to explore the potential military applications of the gas. The Federal Helium Reserve was opened in the 1960s, an 11,000-acre site in the Great Plains containing helium-rich minerals. But by 1996, helium technology seemed less promising, and Congress passed the Helium Privatization Act, which would sell off all government helium by 2014. Federally owned helium sells for about half of what it would on the open market.

To make matters worse, operational funding for the reserve may run out in mid-2013. If that were to occur, a large portion of the world’s helium supply would be locked in the reservoir. A bill is in the works to change how the government sells helium, sponsored by US Senators Jeff Bingaman and John Barrasso. “If Congress does not act, the helium program will disappear altogether in less than three years, leaving our hospitals, national labs, domestic manufacturers and helium producers without an adequate supply,” Bingaman says.

e-News Solutions

Shape the future, participate in a new APICS survey

APICS is conducting a survey to understand the specific job functions and tasks of supply chain and operations management professionals in order to ensure the APICS Certified in Production and Inventory Management (CPIM) designation remains relevant to the profession. Your thoughts and experience can help shape the future of the certification and give you a chance to win an iPad. View rules and participate at apics.org/cpimsurvey.

Mark your calendars! It's time to start getting ready for the 2012 APICS conferences. Visit apics.org/events for information.

Register today for the Best of the Best S&OP Conference in Chicago

The Best of the Best S&OP Conference is designed to provide in-depth education and practical answers from the supply and demand sides of sales and operations planning (S&OP). At the Best of the Best S&OP Conference, you will discover how to introduce, plan, implement, and collaborate on S&OP at your organization.

June 14–15, 2012
Chicago, Illinois, USA
Register today.

2012 APICS International Conference & Expo

2012 APICS International Conference & Expo 
October 14–16, 2012
Denver, Colorado, USA
Colorado Convention Center

APICS 2012 registration discount and the 2012 Leadership Summit
Registration for the 2012 APICS International Conference & Expo is now open. The conference will be held October 14-16, 2012 in Denver, Colorado, USA. The theme of APICS 2012 is Elevate supply chain performance: Value creation through market alignment and integration.

Visit the APICS 2012 website and register today!

APICS North American Seminar Series

This year, APICS offers a series of seminars to bring the APICS body of knowledge to communities across North America.

Find a seminar near you or travel to the one-day seminar that meets your educational needs. See below for a list of seminars:

Webinars On Demand Available

APICS Extra Live: Strategic Imperatives for Improving Supply Networks
Watch the webinar now.

APICS Extra Live:
 Real-World Strategies for Improving Operational Efficiency
Watch the webinar now

APICS Extra Live: Racing Toward Operational Success with Kaizen
Watch the webinar now

APICS Extra Live: The People Factor in Supply Chain Excellence 
Watch the webinar now

APICS Members-Only Webinar: Operations Management Résumé Benchmarking Survey Résumé Structure and Organization
Watch this webinar now. 

APICS Extra Live: Advancing Your Supply Chain with Foreign-Trade Zones 
Watch this webinar now

APICS Extra Live: Merchandising for a Lean Supply Chain 
Watch this webinar now

APICS Extra Live: Keep Projects Flowing with Visual Project Management 
Watch this webinar now

APICS Members-Only Webinar: Résumé Formatting Best Practices

Watch this webinar now.

Purchase APICS supply chain risk and supply chain strategy folios 

Assess risk, develop your organization’s supply chain strategy, and understand how you can successfully implement or grow your organization’s sales and operational planning process with APICS folios.

$19.95 APICS member - Save 50%
$39.95 nonmember 

NEW! APICS Supply Chain Sustainability Folio: Uncovering the Triple Bottom Line

Supply chain and operations management professionals are increasingly called on to carry the torch of innovation to reduce costs, demands on resources, and waste; while increasing the reuse of existing assets, and enabling lean operations. Employing sustainable practices is critical to meeting these business needs.

APICS Supply Chain Strategy Folio: Make the Most of Supply Chain Strategy
Understand challenges and identify areas where senior management and operations management can work together to maximize the effectiveness of your supply chain strategy. Access this APICS folio to delve into critical supply chain functions and tasks that may not be effectively supporting your supply chain strategy.

APICS Supply Chain Risk Folio: Protect your Business with Risk Management
Mitigate and anticipate supply chain risks at your organization—from rising and falling demand to natural disasters, market uncertainty, and varying levels of trust among supply chain partners. Purchase this APICS folio to identify tools to deal with risk at your organization.

APICS S&OP Folio: How to Be an S&OP Champion
Predicting the future generally is thought impossible; yet, S&OP users seek to do just that by strategically directing businesses to achieve competitive advantage. Purchase this APICS folio to understand how you can enable your organization’s bottom-line effectiveness with S&OP.

Access APICS career development resources
Use APICS career packs to understand your career path and next steps, evaluate candidate qualifications, or establish consistency across your organization's hiring.

Free! APICS member
$29.95 nonmember 

  • Individuals seeking to advance in one of the career pack job title areas can evaluate their knowledge and skills, plan their next steps, and identify areas for improvement and growth.
  • Hiring managers seeking qualified candidates can identify specific knowledge, skills, and experience required when evaluating prospective employees and building job descriptions.
  • Organizations interested in developing their workforce can create consistency and establish required competencies for individuals in each of the career pack job title areas. 

APICS career packs:

For each job title, APICS career packs compile essential information to help you understand the job role, including

  • career path information
  • core competencies required of qualified candidates
  • job descriptions and keywords
  • how to use job titles and descriptions.

Download the APICS members-only report 2011 S&OP Practices and Challenges and purchase the APICS Folio: How to Be an S&OP Champion  
Predicting the future generally is thought impossible; yet, S&OP users seek to do just that by strategically directing businesses to achieve competitive advantage, and—more and more—are expected to do so to enable their employers' bottom line profitability.

Supply chain professionals: Take the APICS CSCP Learning System Free Demo today 
By earning the APICS Certified Supply Chain Professional (CSCP) designation, you will demonstrate significant commitment to your profession and your career, distinguish yourself as an industry expert, and excel with your newly acquired specialized knowledge.

APICS CPIM exam study options
APICS offers a variety of study options to help candidates prepare for the APICS Certified in Production and Inventory Management (CPIM) exams and enables them to choose the option that matches their preferred learning method.

Instructor-led courses
For students who learn best in a classroom-based environment, there are instructor-led courses. Find courses at your local APICS chapter or find an APICS partner outside North America to find courses in your area.

Online certification review courses
Online courses are ideal for professionals who enjoy taking a structured class, but need more flexibility.
Other APICS self-study options
APICS offers a wide variety of tools for candidates interested in studying on their own, including the
  • APICS CPIM Exam Content Manual
  • APICS CPIM practice questions
  • APICS CPIM study notes.

All comments will be published pending approval. Read the APICS Comment Policy.


  1. RadEditor - HTML WYSIWYG Editor. MS Word-like content editing experience thanks to a rich set of formatting tools, dropdowns, dialogs, system modules and built-in spell-check.
    RadEditor's components - toolbar, content area, modes and modules
    Toolbar's wrapper 
    Content area wrapper
    RadEditor's bottom area: Design, Html and Preview modes, Statistics module and resize handle.
    It contains RadEditor's Modes/views (HTML, Design and Preview), Statistics and Resizer
    Editor Mode buttonsStatistics moduleEditor resizer
    RadEditor's Modules - special tools used to provide extra information such as Tag Inspector, Real Time HTML Viewer, Tag Properties and other.