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To: Haim R. Branisteanu who wrote (21527)	1/18/2005 12:58:37 AM
From: regli	Respond to of 116555

> I am in agreement with your comments except the issue of the "supply chain". As long as interest rates are low spread out inventory due to transportation time costs very little. At 6% to 8% interest this may add 1% to offshore manufacturing costs on top of logistics etc. < The longer the supply chain the more inventories need to be on hand to cope with possible disruptions. Just think of the docking strike a few years ago, the potential of a bird flu outbreak in a supplier country or simply unexpected extended power outages in the supplier country. Any of these occurrences and worse ones could have a devastating impact on business continuity and competitiveness. Just-in-Time is extremely cost effective when the supply chain functions properly but disruption risks need to be factored in and insured against. Therefore, the closer your supplier is to your facility the lower the risk of disruption. This plus the cost of the additional inventory need to be considered in the cost benefit analysis.