The difference between Production Without Factory, Outsourcing or Offshore.
Refer to: Production Without Factory
Yes. This is a popular model with many large corporates, who get work done by local factories and processors.
It's profitable! But the manufacturer of the product has to work somewhere. Promising application in those areas where the finished product can exist not in material, but in virtual space.
Regards, Sergey Viktorovich Pushkin
Sara Hamidi
Dear Researcher,
This is a very relevant question because it is about production during the times of this pandemic.
In this question you have raised the issue of outsourcing and offshore production. "Outsourcing" means that someone will produce the commodities on behalf of me. "Offshore production" means that the production will be carried on in some other place, preferable in some other country. This is a very good idea but there is one problem. The whole world has been impacted by this pandemic. I don't know a single person who has not been a prey of this pandemic, directly or indirectly. So, if for some reason, I am unable to carry on with production, then for that reason (or for some other reason) everybody else will also be unable to carry on with production. So the question that arises in this context is that if I want to outsource production or carry on with offshore production, then who will help me out. The answer is "no one". And this is the reason that a pandemic usually never comes alone. Most of the time it is accompanied by its buddy, "economic recession", thereby proving an old English saying that bad luck strikes in bundles.
Therefore, to sum up, it can be said that during this pandemic, production without involvement of factory may be possible at a regional level, at a small scale. But certainly, factory system of production is very difficult or impossible.
Thank you.
Best regards,
Anamitra Roy.
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Everyone is affected by the pandamic,so i see the offshore or the offsource is limited.
Sara Hamidi Yes. Why not?
Unless something essential for managing factory-free production happens (let's say total closure for trade on merchandises, end of people travels if they are essential and cannot be substituted by online contact...) offshoring will be a strategy that firms will consider and in many cases choose.
Covid has only revealed a risk on this strategy that was hidden (something may happen that stops production in some places).
Let's reevaluate the decission with this higher (than we believed in the past) risk and ... the solution can be offshoring.
An economic crisis will follow the health crisis. It can suppose lesser demand, lower wages in some countries... Again, a reevaluation of the variables and offshoring can be the solution.
In some sectors, the advantage of producing in S.E. Asia is so large than even with those factors offshoring will remain being the optimal alternative.
rebuild an entire sector is really difficult (even it were profitable).
Thanks Sara for you definition. These are innovations at time of crisis and as with every product there are is pros and cons. Sometimes the pros are many and hence profitable.
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