Consider these three tactics to ensure your reshoring investment pays off.
When manufacturers commit to reshoring, they dedicate significant resources to redrawing their supply chain footprints to either bring capabilities in house or to a nearby supplier. The rewards promise to be well worth the effort. But there’s no sugar coating the fact that reshoring is a major investment in the future competitiveness of a business, and it simply can’t afford to fail.
In Part 3 of our webcast series on Making the Decision to Reshore or Nearshore, I dive into some of the most critical success factors for relocating to the USA or Canada. In this episode, we unpack three important tactics:
- Optimizing production processes
- Reducing waste and cost
- Leveraging automation
Here’s a snapshot of what was discussed including recommendations on next steps to take to help guarantee a reshoring win for your manufacturing operation.
1. Invest in sustainable operations improvements with the biggest impact.
Whether bringing capabilities in house or working with a new local supplier, optimizing production processes is critical to reshoring success. In the past, the impetus for a global supply chain and offshoring has always been to capture labor cost savings and avoid capital costs. Now that risk and total cost of ownership are factoring more heavily into the decision of where to source, companies still need to capture cost and flexibility efficiencies while keeping quality high. And the best way to achieve this is through operational excellence and a continuous improvement mentality.
Conducting an operations diagnostic is an important first step here as it provides manufacturers with an understanding of the full potential within any facility as well as valuable insight into the gaps between where a plant or organization stands now and where it needs to be to achieve that full potential. This exercise allows companies to identify and allocate limited resources to the highest priority and most sustainable improvements with the greatest impact. And it helps with rightsizing capital improvements—something that is key in an environment where capital is much more expensive than it has been in decades.
Very often, such exercise point to improvements in visual controls and management systems that boost tiered accountability and facilitate long-lasting productivity improvements. These types of investments help drive and sustain ongoing performance gains day in and day out and position manufacturers for long-term success in both good times and bad.
2. Remove waste and cost everywhere you can.
Operations improvements help eliminate waste in processes, including labor and equipment waste, allowing an organization to operate "lean and mean" and compete more effectively, particularly in recessionary times. This is one of the most effective ways to control costs in the process, and it also sets up companies up to take better advantage of growth opportunities when the economic landscape improves.
At the same time, there are other important operational considerations that can help companies control the capital costs involved in reshoring and thus remove some of the investment risk in the decision. Government incentives nationally as well as by state and even county should be fully investigated and leveraged wherever possible to help reduce the total cost of reshoring initiatives.
Another effective strategy can be to share costs and risks with suppliers and partners that have a need for like materials. Instead of a vertical integration approach, manufacturers can work together to create a local supply chain campus that can support the needs of multiple organizations. It’s worth exploring the possibilities and seeing if partnership opportunities make sense for your organization.
3. Amplify efficiencies with automation.
Labor concerns will be a big topic in any reshoring conversation and automation can be part of the solution. However, automation should always be done in conjunction with process optimization efforts. Otherwise, companies risk automating the waste in their workstreams, which is clearly not an effective use of scarce capital resources.
Instead, lean out processes as much as possible first, then selectively invest in optimization where it makes the most sense for your business. Highly repetitive processes where automation is relatively easy to achieve or areas where automation can dramatically enhance outcomes and quality by reducing human error are great candidates for successfully introducing automation and getting the greatest return on the investment.
Plan on reshoring success by leaving nothing to chance.
Process improvements, cost control measures, and strategic automation can go a long way in making a reshoring initiative as successful as possible. But whichever strategies companies choose to pursue, careful, detailed planning will be crucial to setting realistic timelines and budgets, properly allocating resources, and keeping progress on track.
Because of the scope of a reshoring investment and how much reshoring will fundamentally impact many areas of the business, it often makes sense to engage with third-party operations and supply chain experts, like TBM, to help with the strategy, planning, execution, and tracking. This dedicated expertise and support can help companies accelerate their reshoring plans while ensuring they achieve the greatest reward from the effort.
To learn more about planning for reshoring success, tune into the full webcast Part 3: Optimizing Operations Processes for Successful Reshoring.