I recently gave a speech on products made in China to ASQ’s customer service division in Raleigh, North Carolina. The critical takeaways were that global uncertainties and risks were fundamentally changing the rules of outsourcing and offshoring. What’s going on? Let’s look at few of the changes.

Over the past year, two companies reanalyzed their business models and supply chains. Boeing Co. adopted a business model that emphasizes outsourcing and supply management. It incorporates designing the core product, outsourcing the core assembly (up to 85 percent of manufacturing costs), assembling the complete product, testing the product to assure compliance, and then managing the Boeing brand. Although the Boeing 787 Dreamliner was built following this model, Boeing didn’t anticipate and manage supplier-fastener risks. The result was delays in its introduction and reputation loss.

Toyota’s lean management is the benchmark for best manufacturing practices. As Toyota has become the world leader in auto production, it has had difficulty scaling its lean practices. In 2007, it had its fifth vehicle recall and suffered a blow to its reputation when Consumer Reports gave its cars poor reviews—Toyota is now third, behind Honda and Subaru, in reliability, and two Toyota models recently fell “below average” in predicted reliability.

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