Gartner Research

Combat These Seven Myths of Low-Cost Manufacturing

Published: 26 October 2016

ID: G00293453

Analyst(s): Simon Jacobson , Kamala Raman

Summary

Supply chain leaders responsible for selecting new manufacturing locations must be aware of potential traps surrounding low-cost manufacturing. This research sets outs benefits and cautions associated with low-cost country manufacturing and provides recommendations to combat common myths about it.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Avoid These Common Myths About Low-Cost Manufacturing Sites
    • Myth No. 1: Manufacturing Locations Should Be Selected Primarily or Solely Based on Production Costs
    • Myth No. 2: Chase the Long Tail of Cheap Labor to Reduce Production Costs, Even If It Is at the Expense of Productivity
    • Myth No. 3: Market Conditions Are Likely to Remain Static and the Impact of Bifurcation Can Be Overlooked
    • Myth No. 4: Automation Will Eliminate the Need for a Skilled Workforce
    • Myth No. 5: Short-Term Political and Regulatory Focuses Will Pay Off in the Long Run
    • Myth No. 6: Logistical Infrastructure Challenges Are Not Relevant to Manufacturing Siting Decisions
    • Myth No. 7: The Overall Business Ecosystem and Sourcing Decisions Can Be Disconnected From Site Selection

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