EAST GREENWICH, RI – Some manufacturing and customer support functions are coming back onshore, and that trend is expected to continue, according to The Society for the Advancement of Consulting® (SAC).
Supply Chain Strategy Needs to Tie To Business Strategy
Many companies are considering returning their manufacturing operations to America if they are not already doing so, according to Rick Pay, who has been dubbed the "Sherlock Holmes of Operations and Supply Chain Management" by his clients and is the Principal and Founder of The R. PAY COMPANY, LLC.
"Three primary reasons are driving this change," said Pay. "First, companies want to be nearer to their customers thus shortening the supply chain. Second, companies are considering the total cost of ownership which includes logistics and the cost of inventory. Third, companies are more aware of supply chain risk and are using regionalization as one means to mitigate that risk.
"In any case, re-shoring should be part of a larger supply chain strategy which should be closely tied to the strategy of the business."
Made in the USA Has a New Cachet
"The vast majority of my clients and key contacts are beginning to ask questions about bringing manufacturing back to the Americas," points out Lisa Anderson, who is known as The Manufacturing ConnectorSM and is President of LMA Consulting Group, Inc. in Claremont, CA.
"As the total cost for outsourcing to places such as China become a wash with the costs to producing in the U.S. or Mexico, more executives are not only thinking twice before outsourcing but they also are seeing the value of in-sourcing," she said. "Made-in-the-USA also has significant reputation benefits and minimizes supply chain risk, and so I’ve seen a dramatic rise in interest of in-sourcing / near-sourcing. Executives should focus on dramatically improving customer service and flexibility. If they excel in these areas, they will thrive."
Customer Contact Drives Decision
According to SAC CEO Alan Weiss, PhD, "There will likely be a combination of off-shoring and in-shoring, and we shouldn’t expect either to be the sole extreme. Going offshore makes sense for non-customer service matters, because the minimum wage in places like the Philippines is about a dollar an hour.
"But wherever customer contact is required, more companies will pay more for Americans to deal with their countrymen."