There is a growing trend to reshore manufacturing back to the U.S. as companies realize the true costs and advantages associated with onshoring.
The turn of the century marks a significant time in manufacturing history. In large numbers companies moved manufacturing offshore. Labor costs were cheaper, the cost of shipping decreased, moving product became less of an obstacle, and international communication became less of a barrier.
What companies did not forecast were the challenges to offshoring. Nor, how American manufacturers would leverage the shift to create opportunities for improved equipment, labor and processes.
During the past 10 years, American manufactures have strategically and creatively developed competitive pricing solutions. A number of improvements have been applied that do not sacrifice quality, yet, allow the manufacturer to employ higher priced domestic labor.
The cost to employ and source offshore is unpredictable. Labor costs are rising in most emerging countries. And currency fluctuations from year-to-year add unexpected costs. Onshore manufacturing is steadily closing the gap on foreign wages.
Modern day onshore manufacturers manage resources and provide solutions to budget constraints.
Design for Manufacture (DFM) and Design for Manufacture and Assembly (DFMA) methodology is applied and used to anticipate manufacturing costs, materials and design early in the process. New manufacturing technologies and automation are utilized. Cost reduction efforts with a focus on continuous improvement are a mainstay for today’s domestic manufacturer.
The allure of manufacturing overseas has lost its luster as offshore customer service delivery has deteriorated. We can all agree that international communication is better than it was 10 years ago. However, it’s not without complications. Communication breakdown, misunderstood direction and poor customer service lead to costly mistakes.
An experienced domestic supply chain manufacturer understands the significant value of communication. Shorter production times, reduced error rates and top-notch customer satisfaction are onshore benefits—and cost saving solutions—that many companies realize after they’ve experienced an egregious dissatisfaction overseas.
Explaining that something was “lost in translation” takes on a whole new meaning when a misunderstanding affects your company’s production schedule.
Onshore manufacturing also eliminates the need for overseas shipping which can result in longer lead times and can significantly increase the overall cost of the product. Unforeseen shipping challenges may occur, and often time offshore manufacturers require companies to maintain larger inventories.
Onshore manufacturing reduces the potential for shipping difficulties that could be detrimental to a company’s product launch, reputation and profits.
There are also costly landed costs – otherwise known as hidden or unknown costs. Landed costs include taxes, import fees, offshore scheduling and resource management fees.
Most importantly, quality is often unknowingly sacrificed. Overseas vendor management and governance has a direct impact on product quality. Companies must trust that the quality systems that are applied in the U.S. are also followed offshore. If a problem arises, a company may have little recourse available overseas. Thus, offshore manufacturing can play out like a costly game of chance.
Made in the U.S.A. is more than a label. As Americans, we take pride in what we build. American manufacturing has grown stronger and wiser to overcome challenges faced by offshore competition. At MME group, ‘Made in the U.S.A.’ is a guarantee to customers that quality, price, communication and on-time delivery are never sacrificed.
Learn more about MME group’s Made-in-the-USA services or please email or call Brian Bussmann at (651) 483-0965.