TechGear (TG) assembles wearable fitness devices in its home country. TG is considering offshoring assembly to Country X using a foreign supplier. Annual output is expected to be 50000 units.

MedPrint (MP) produces 3D-printed medical device casings. MP currently uses an overseas subcontractor, but managers are considering insourcing production to improve confidentiality and quality control. MP needs 18000 acceptable casings next year. Defective casings cannot be sold but still incur production costs.

GreenBite Foods (GBF) is a private limited company that produces frozen plant-based ready meals for supermarkets. GBF currently produces in a rented kitchen close to the capital city, where most of its supermarket customers have their head offices. The current site has high rent, limited freezer space and traffic congestion that delays deliveries. However, most of GBF’s experienced production employees live nearby and the business has good relationships with local ingredient suppliers.

A regional authority has offered GBF a long-term lease in a new food production park 150 km away. The site has lower rent, reliable electricity, larger cold-storage facilities and direct access to a motorway. The authority will provide a grant if GBF creates jobs in the region. However, the regional labour pool has little experience in vegan food production, and some current employees have said they would not relocate. GBF’s directors want to increase production capacity while maintaining product quality and its ethical reputation.

NordForm Lighting (NFL) designs and manufactures premium desk lamps for online customers and boutique retailers. The lamp bases are currently produced in-house in NFL’s factory using ageing metal-cutting equipment. Breakdowns have increased and managers are spending more time on production problems than on product design and marketing.

A specialist subcontractor located in the same country has offered to produce the lamp bases for NFL. The subcontractor has modern equipment and could increase or reduce output quickly depending on NFL’s orders. Outsourcing this stage of production would allow NFL to avoid buying new machinery and to focus on design. However, the lamp base is an important part of the product’s appearance and durability. NFL’s brand is based on high quality and responsible working conditions. Some production employees are worried that their jobs will be lost if subcontracting is approved.

FreshBox Foods (FBF) prepares chilled meal kits for supermarkets. FBF currently produces in a city-centre factory close to several large supermarket distribution centres. Demand has increased, but the current site is congested, rent is rising and delivery vehicles are often delayed. FBF is considering relocating production to Northgate Industrial Park, 80 km away. Northgate offers lower rent, more space and a local authority training grant, but it is further from FBF's main customers and most current employees do not want to move.

Table 1 compares the current city-centre location with Northgate Industrial Park.

Willow & Bean (WB) is a medium-sized coffee business that roasts beans in-house and sells branded coffee to cafés and independent grocery stores. WB's brand image is based on consistent flavour and ethical sourcing. Its current roasting equipment is operating close to full capacity, and a new roaster would require significant finance. WB is considering subcontracting all roasting to RoastPro, a specialist roasting business located in the same country. WB would continue to buy the raw coffee beans and design the blends, but RoastPro would roast and package the coffee.

Table 1 shows information about continuing in-house roasting and subcontracting to RoastPro.

PulseStep (PS) produces high-quality smart running insoles that measure pressure and movement. PS designs the product in its home country but offshored final assembly three years ago to a supplier in Country Z. The decision reduced labour costs and helped PS meet rapid international growth. Recently, wages in Country Z have increased, shipping times have become less predictable and several batches have failed PS’s quality tests. PS is also concerned that technical knowledge about its sensors may be shared with competitors.

PS is considering reshoring final assembly to a small automated facility near its home-country research centre. Reshoring would shorten lead times to PS’s main market and make communication between engineers and production employees easier. It may also strengthen PS’s brand image, as many customers value locally made sports technology. However, the move would require significant investment, domestic wage rates are higher and local suppliers of some electronic components are limited. PS’s finance director believes that the cost savings from offshoring may still be important while demand is uncertain.

PulseSense (PS) designs sensors used in smart watches. Five years ago, PS offshored production to a subcontractor in Country Z to reduce costs. Recently, wages in Country Z have increased, the exchange rate has become less predictable and shipping delays have caused some major customers to complain. PS is now considering reshoring production to its home country and insourcing it in a highly automated production facility. The home-country facility would require a large initial investment but would be close to PS's design team and main customers.

Table 1 compares continuing with the offshore subcontractor in Country Z and reshoring production to PS's home country.

HarvestHub Modules (HHM) – a social enterprise

Read the resources and answer the questions that follow.

Resource 1 — Background of the social enterprise

HarvestHub Modules (HHM) is a social enterprise that designs and manufactures modular kitchens for food banks, community farms and disaster-relief charities. HHM’s mission is to reduce food waste and improve access to hot meals in low-income areas. Its kitchens are made from recycled steel and can be installed in unused community buildings within two days. HHM currently produces in an old inner-city workshop close to several charities, but the site has high rent, poor access for delivery vehicles and limited space for storing bulky steel panels. HHM employs 42 people, including 18 formerly long-term unemployed workers who receive paid technical training.

Resource 2 — Table 1: Selected information for HHM’s current and proposed production locations

Resource 3 — Social-media statistic

A recent HHM post about “moving production closer to suppliers to reduce emissions” received 7400 positive reactions, but 31% of comments expressed concern that trainees without cars might lose their jobs.

Resource 4 — Quotation from HHM’s operations manager

“Our current site helps us stay close to community partners, but delivery lorries often arrive late because of congestion. The logistics park would improve efficiency, but we must not damage the trust we have built with employees and charities.”

Resource 5 — Additional information

The local authority has offered HHM a three-year rent discount at the logistics park if HHM continues to train disadvantaged workers. A university engineering department near the logistics park has also offered to help HHM redesign the kitchen modules to reduce material waste.

CareCycle Textiles (CCT) – a social enterprise

Read the resources and answer the questions that follow.

Resource 1 — Background of the social enterprise

CareCycle Textiles (CCT) produces washable medical gowns and bedding for small clinics. CCT’s social purpose is to reduce single-use medical waste and provide stable employment for refugees and people rebuilding their lives after homelessness. CCT currently insources cutting, stitching and final inspection at its home-country factory. Demand has increased quickly after a national hospital charity promoted CCT’s products. CCT has been offered two ways to reorganize production: subcontracting stitching to a local cooperative or offshoring stitching to an overseas supplier. CCT would retain product design and final inspection in-house in both options.

Resource 2 — Table 1: Production reorganization options for CCT

Resource 3 — Social-media statistic

After CCT mentioned possible offshoring in a video, 54% of comments supported “lower prices for clinics”, while 38% criticised “moving work away from vulnerable local employees”.

Resource 4 — Quotation from CCT’s founder

“Our clinics ask for lower prices and reliable supply, but our social enterprise exists because employment changes lives. If we lose control of quality or working conditions, we lose more than a contract.”

Resource 5 — Additional information

The local subcontractor is worker-owned and can increase capacity gradually, but it requires a two-year agreement. The overseas supplier can meet large orders immediately, but communication is mainly through a sales agent and prices are quoted in a foreign currency.

BrightBite Farms (BBF) – a social enterprise

Read the resources and answer the questions that follow.

Resource 1 — Background of the social enterprise

BrightBite Farms (BBF) supplies low-cost nutritious snack packs to schools in areas with high child poverty. BBF grows some ingredients in urban hydroponic farms and buys additional dried fruit from fair-trade growers. Three years ago, BBF offshored the packing of snack packs to a certified overseas contractor to reduce costs. Since then, schools have asked for faster delivery and more locally tailored packs for children with allergies. BBF is considering reshoring packing to its home country and insourcing the activity in a new regional facility near its largest group of schools.

Resource 2 — Table 1: Continued offshoring compared with reshoring and insourcing packing

Resource 3 — Social-media statistic

A survey on BBF’s school-community page found that 68% of respondents preferred “locally packed food with lower transport emissions”, while 22% stated that “the lowest possible price matters most”.

Resource 4 — Quotation from a school purchasing manager

“We support BBF because it combines nutrition with social impact. However, if packs arrive late or cannot meet allergy requirements, schools will choose another supplier.”

Resource 5 — Additional information

The proposed regional facility is in an area with high unemployment and a technical college offering food-safety training. A government grant would cover 35% of the initial equipment cost if BBF creates at least 25 jobs. BBF’s finance manager is concerned that higher fixed costs could make the organization vulnerable if school budgets are cut.