Yet, not only is there a move towards regionalization—there is a move toward resiliency in supply chain. And it is more evident than ever for manufacturers and their suppliers to ensure they are both on the same path of success.
While more than 75 percent of suppliers are confident in their ability to meet their customers’ needs in 2013, one third of respondents (33 percent) to the “2013 Manufacturing Outlook” report from ASQ confirmed they anticipate a problem with a supplier next year, resulting in parts- or service- shortage.
“A lot of companies are more concerned about risks now than they ever have been before,” said Gould.
“And how they handle risk management in their supply chain is critical. Nowadays, there are a lot more factors that the manufacturers have to deal with in working with their suppliers. It’s not just the quality, the price or the delivery of things they are buying. There is the whole risk picture, there is business continuity planning, there are social responsibility issues right now with environmental and human resource issues.”
Yet, all hope is not lost. The report further confirmed that of the more than 1,250 manufacturing professionals globally who anticipate a problem with a supplier, 42.1 percent said they continue to work with partners on process improvements to mitigate volume capacity; while more than 60 percent of the survey respondents confirmed that their organization has a formal process in place to address supply chain risk.
“Mitigating risk and resiliency of the supply chain—companies tend to make this too much of a project,” said P&G’s Jake Barr. “One of the best investments you can make is changeover capability—the ability to reduce reaction time from SKU to SKU.”
Regardless of which side of the reshoring versus outsourcing discussion you stand on, it is vital to understand the region you are investing in and your go-to strategies applicable to that consumer segment to gain the most return on investment—in addition to proactively adding to (and securing) its economic footprint.
SIDEBAR: West Monroe Breaks Down the Manufacturing Discussion Further
“Onshored versus offshored employee: It’s not an apples to apples comparison. Offshoring is no longer a “no brainer” for manufacturers. Where once the differential in cost between a U.S. employee and an offshored employee was staggering, the gap closed significantly. What’s more, manufacturing jobs are more complex today and require a different skill set. As such, manufacturers must focus on the productivity, skill set and “total cost of delivery” – which makes reshoring an attractive option. Manufacturers should do an analysis to understand the potential ROI of reshoring to help justify the upfront investment.
Some timely factors manufacturers should be considering include:
- Wages in China increased 500 percent since 2000 and are expected to continue to rise at a rate of 18 percent per year
- Higher oil prices are reflected in even higher shipping costs
- U.S. unions continue to become more flexible to promote domestic job growth
Reshore for innovation: the key to manufacturing success in the U.S. is innovation—matching the right talent with the right processes and technology to deliver the superior product. The U.S. continues to be a leader in innovation—reshoring jobs solidifies manufacturers’ ability to design the latest and greatest products. This is what will position manufacturers for true long-term growth (despite the fact that things like wages, oil prices, etc. will continue to fluctuate).”—Sean Adkins is Director of Workforce Optimization for West Monroe Partners