Executive Briefings

Advice for Manufacturers Considering Re-shoring

The trend of manufacturers "re-shoring" their operations to the western hemisphere is real. Greg S. Anderson, president of Co-eXprise Inc., talks about the challenges involved in executing that strategy.

Anderson cites a recent prediction by Gartner that some 20 percent of goods now sourced in Asia will be re-shored to North and South America by 2014. "That's something we're seeing in our customer base," he says. On a commodity-by-commodity basis, companies are rethinking the difficult decision on where to buy their direct materials.

The increasing amount of risk in the supply chain, triggered by globalization and outsourcing, is a major factor in managers' thought processes. They are paying more attention to multiple aspects of risk, including geopolitical developments and natural disasters. "It's a multifaceted decision today," says Anderson.

A valuable approach to take is the "total-cost" calculation of moving product to market. Where such decisions might once have been based almost entirely on the cost of labor, today managers are factoring in such elements as lead time, supplier quality and the need to keep safety stock on hand in case of a supply-chain disruption.

It's not easy to assess the price of quality, Anderson acknowledges. But companies must conduct due diligence before engaging any supplier, with deep scrutiny of its reliability, stability and overall reputation.

For companies considering re-shoring, he recommends that they scrutinize their total landed cost, as well as various non-cost factors. They need to balance labor content with the cost of shipping parts over long distances. For example, "you might keep plastics in Asia, but bring machine parts back to the U.S."

To view video in its entirety, click here


Keywords: supply chain, supply chain management, inventory management, inventory control, logistics management, supply chain planning, retail supply chain, sourcing solutions, supply chain risk management

Anderson cites a recent prediction by Gartner that some 20 percent of goods now sourced in Asia will be re-shored to North and South America by 2014. "That's something we're seeing in our customer base," he says. On a commodity-by-commodity basis, companies are rethinking the difficult decision on where to buy their direct materials.

The increasing amount of risk in the supply chain, triggered by globalization and outsourcing, is a major factor in managers' thought processes. They are paying more attention to multiple aspects of risk, including geopolitical developments and natural disasters. "It's a multifaceted decision today," says Anderson.

A valuable approach to take is the "total-cost" calculation of moving product to market. Where such decisions might once have been based almost entirely on the cost of labor, today managers are factoring in such elements as lead time, supplier quality and the need to keep safety stock on hand in case of a supply-chain disruption.

It's not easy to assess the price of quality, Anderson acknowledges. But companies must conduct due diligence before engaging any supplier, with deep scrutiny of its reliability, stability and overall reputation.

For companies considering re-shoring, he recommends that they scrutinize their total landed cost, as well as various non-cost factors. They need to balance labor content with the cost of shipping parts over long distances. For example, "you might keep plastics in Asia, but bring machine parts back to the U.S."

To view video in its entirety, click here


Keywords: supply chain, supply chain management, inventory management, inventory control, logistics management, supply chain planning, retail supply chain, sourcing solutions, supply chain risk management