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Designing Supply Chains for New Product Development by Antonio Arreola-Risa, Barry Keys

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Chapter 3

Low-Cost Country Sourcing

The next level of argument that is generally encountered after “make versus buy” is the issue of why can’t the work be done somewhere where the labor cost is lower than what it would be in the United States? This is a very fair question and to answer it one must now start also thinking about transportation costs, product/component quality, intellectual property protection, specific country rules and regulations, import duties and fees, and so on. These considerations are in addition to finding suppliers in another country with appropriate capacity and capability (as if finding them in the United States wasn’t difficult enough!).

The low-cost country sourcing decision is not trivial, and if one thinks about ...

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