The founder of the Reshoring Initiative, Harry Moser, wrote an article last year for Industry Week detailing all of the benefits companies could have if they move producing and sourcing products to the US shores. He hits costs over time right away. Localization, producing near the consumer, often reduces total cost due to shortening supply chains and contributing to a lean and agile strategy. The savings on non-manufacturing costs as a result of producing in the market in which the products will be sold can often overcome a 15-20% manufacturing cost gap caused by an 80% wage gap. Manufacturing companies especially are seeing the value in reshoring thanks to localization. Moser cites the following reasons that reshoring is looking more attractive to manufacturers: rapidly increasing emerging market wage rates, low US energy costs, productivity gains, and the economic benefits of localization [...]
Offshoring manufacturers incurred a significant risk to their intellectual property. While it can be hard to predict how likely your systems will be hacked and you sensitive data compromised, part of the reshoring momentum is the idea that it will become easier to safeguard your IP. In August 2014, the Reshoring Initiative found that only in 8 percent of the known reshoring cases the companies indicated that IP theft motivated them to reshore. The Initiative attributes this low number to a lack in awareness, especially considering that they learned 21 percent of businesses overall experienced data theft or inappropriate access of their IP. Re-creating and protecting the supply chain Manufacturing experts have emphasized the prominent, ongoing role of China in IP theft from American businesses, no matter where they are located. They also cautioned manufacturers to avoid reliance on exclusive offshore [...]
Many reshoring manufacturers have ambitious goals for their transition. For them, it’s not primarily about saving costs or simplifying logistics and compliance processes. They want to get closer to their customers through greater responsiveness and direct collaboration. They aim to profit from fast-moving, high-value innovation. An educated, motivated workforce is essential in achieving these goals. For some manufacturers, that will mean learning how to attract and retain the best people. In many offshore locations, economic necessity and the relative scarceness of good jobs may make it easy to recruit outstanding professionals. In the reshore operation, that may be more of a challenge. The people you want expect you to provide contemporary technology to help them succeed Mid-career professionals as well as younger workers will expect you to provide a professional work environment that helps them grow in their careers and [...]
In North America and Western Europe, many companies have reshored call centers, support functions, and inside sales operations because the customer experience was abysmal. Operators in the offshore locations often did not understand the mentality of demanding customers and may have lacked the training and product knowledge that would have made them more effective. Offshoring savings in terms of labor costs translated into expenses when customers left or broadcast negative reviews on social media, or when managers had to commit to expensive next-day shipping or other remedies to retain a dissatisfied customer. Reshoring manufacturers have rarely made those kinds of experiences. Most of them long ago worked out any kinks and inefficiencies in their supply chains and logistics to meet customer expectations. As long as offshore operations could be held to clearly defined product specifications and measurable quality standards, they [...]
Reshoring manufacturers have been seeing plenty of success by bringing their operations back within the boundaries of the United States. There has been major advancements with cloud ERP systems that sit at the center of manufacturing organizations that take some of the complexity of a major initiative like reshoring off the shoulders of executives worrying about critical details. This infographic breaks down the who, what, when, where and why this trend isn't a passing fad. You'll also get information on how cloud ERP is the right decision in a lot of these cases with how versatile and mobile these platforms can be for forward-thinking manufacturers. If you want access to more reshoring information, read the free 14-page white paper, "5 ways cloud-based ERP makes reshoring easier and more profitable."
When manufacturers think about reshoring operations to North America from an offshore location in another region, business management technology may not always be treated with the priority it deserves. In addition, some manufacturers do not give enough strategic consideration to reshoring and its opportunities for creating a leaner, more customer-centric, more innovative business. As a consequence, companies may replicate the technical environment, workflows, and processes of the offshore operation in their reshoring initiative, including inefficiencies and bottlenecks. Avoiding high technology costs and process inefficiencies in reshoring One outcome of poor reshoring planning is high spending on software solutions and hardware systems, with uncertain results. Companies implement complex, expensive ERP and other systems at the same time as reshoring is underway, bringing disruption to an already challenging undertaking. Traditional ERP deployments that are concurrent with reshoring projects have a high likelihood [...]
What happens in reshoring? Reshoring is when Manufacturers and other production companies move their formerly offshored operations from China, India, Latin America, and other regions back to North America. Initially, shortly after the turn of the millennium, while other companies still offshored with gusto, a handful of specialty manufacturers realized that offshoring did not enable them to deliver the product quality and supply chain control that they required to ensure the long-term viability of their businesses. Around 2010, some of the largest brands in the industry began to transition manufacturing back onshore when they saw what a difference reshoring could make in their ability to meet changing customer needs and spur innovation. When business conditions in the offshore countries changed—increasing costs, more complex regulation, and risk to intellectual property all greatly contributed—many more manufacturers initiated reshoring initiatives. Certainly, other reshoring [...]