keynote feature


decision?


‘Cost savings typically drive the outsourcing decision’ – Kasarda


consultants, insurance salesmen or health club staff. Thewhole processwas lauded by theworld press and by


the global forwarders as a ground-breaking, revolutionary process – although themedia should have known better, for the newspaper andmagazine business had runwell thatway for centuries, based on the simple principles that outsourcing involved the use of freelancers or contributors onlywhen you needed themand just-in-time deliverywas known, far less glamorously, as a deadline. But therewas a fundamental difference in the reason for


manufacturers outsourcing their requirements:whereas the concept of using freelancers or contributors had involved employing the services of professionalswith specialist knowledgewhen andwhere theywere needed, the idea of outsourcing in the supply chainwas almost totally based on the fact that people in some low-cost countrieswere able to pay theirworkforce very


considerably less to produce these goods than the nations thatwanted to buy those items could pay their own nationals to produce them. John Kasarda, director and professor of strategy and


entrepreneurship at the Frank Hawkins Kenan Institute of Private Enterprise, Kenan-Flagler Business School, the University of North Carolina, notes: “Cost savings typically drive the outsourcing decision.” Butwhen fuel prices last year soared up to US$147 a


barrel, transportation costs escalated and the situation caused concern and a lot of soul-searching on the advantages of nearsourcing. The concept here is tomove themanufacturing centre verymuch closer to the customer base, a tactic thatwouldwork to keep down transportation costs. Ifmodern-daymanufacturing demanded cost-cutting, then transportationwaswhere those costs could be saved. Thismight be particularly


AIR LOGISTICSCHINA 11


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