Executive Briefings

The Manufacturing Renaissance in the U.S. and What's Driving It

A manufacturing renaissance is taking place in the United States. According to a recent MIT study, 14 percent of manufacturers have made definite plans to move some of their currently offshore production back stateside. An additional 30 percent are considering it. The common term being used for this is reshoring. The reshoring trend is growing and can garner goodwill with domestic customers, consumers and even legislators. But any careful decision to reshore or expand domestic manufacturing capacity will be predicated on goodwill benefits and growing profitability.

What factors are driving the revitalization of domestic manufacturing? There are several benefits increased domestic manufacturing capacity can bring, ranging from political to economic. Offshore plants and factories may struggle today with a lack of visibility in their upstream and downstream supply chains, and reshoring may bring additional control and insight. Over the last decade, the cost of transportation of goods has risen with higher gasoline prices. So while pure manufacturing costs may still be lower for offshore plants, the total landed cost may not be lower. International labor costs have grown enough to reduce the savings that were previously realized when manufacturing was originally sent overseas.

The cost of disruption of work due to labor issues is another consideration, as well as the risks associated with loss of intellectual property or nationalization of local subsidiaries of multinational companies. Additionally, failure to meet an evolving multitude of stringent quality controls and regulations can further trigger an analysis to relocate manufacturing operations that are currently overseas.

But do the potential benefits outweigh the potential cost increase of reshoring or expanding production in the U.S.? Your organization needs to find out if it can equalize cost benefit in its favor. For any domestic manufacturing plant, profitability will ultimately be tied to how efficiently it can be run. Often, that focus on efficiency translates into a larger opportunity for technology to play a role in optimizing performance for domestic plants than in their international counterparts. Today's technologically equipped plants will require the automation and mechanization investments of the past decade along with the ability to scale and multiply those technological forces through mobility tools for the skilled workforce.

Mobility can act as a force multiplier for a manufacturer.  However, a comprehensive mobility strategy requires more than just one radio, one mobile computer, one wireless network, or one barcode scanner. An integrated suite of solutions can dramatically transform your plant floor and increase its efficiency, enhancing the profitability of your reshored or expanded domestic capacity.

There are three main elements of a modern manufacturing plant that can benefit from a comprehensive mobility strategy: assets, people and materials.

Assets

Your assets are the significant capital investment that keeps your business running. From the machines along your production line to your lift trucks, each plant floor has numerous assets to keep track of and maintain. Delays to repair or replace equipment can lengthen unplanned downtime, and greatly affect your bottom line as production slows or even stops. A recent study by Coleman Parkes Research Ltd, on behalf of Computer Associates, pegged the average cost of unplanned downtime as high as $196,000 per hour, but this will vary greatly based on the capacity of the plant and the specific segment of manufacturing. Also, domestic manufacturers are faced with a significant shortage of skilled technicians that can serve and support their production equipment. A large number of current technicians are increasingly entering or nearing retirement. Thus, the focus turns to ensuring new maintenance and production employees have what is needed at the point of work to make the right decisions and do the job required of them, so that your production equipment can perform at the level you require in order to meet performance targets for profitability and growth.

To help facilitate these real-time decisions, deeply integrating mobile technology and automation is a major key to getting the most out of your equipment. Devices such as mobile handheld computers or enterprise-grade tablets keep operators connected to operations throughout the plant floor. They are provided immediate access to critical information, alarms, alerts and automation control with mobile human-machine interfaces for monitoring and troubleshooting.

For example, let's say there is a fault with a piece of equipment on the plant floor. An operations manager will receive an alert on his mobile device indicating the specific problem and dispatch the appropriate technician to make an immediate repair. The technicians are enabled by mobile devices or two-way radios to inform them of the malfunction and the urgency to repair the machine. The technician now has enough information to arrive at the fault location with the proper tools and parts. Downtime is reduced, production can go on and efficiency continues to increase as not just any technician, but the right technician, is sent to fix the problem before it cascades and expands into other areas of operations in the plant. For less experienced maintenance technicians, video collaboration with remote experts on the mobile device at the point of activity provides real-time support and training.

Whether you depend on reactive maintenance, scheduled maintenance, or predictive maintenance to keep your assets up and running, providing mobile access and extensions to your human-machine interface, operator rounds, and maintenance records can help your domestic plants run more efficiently and increase profitability.

People

Your people are what make your plant floor work. The manpower and level of skilled labor you need on the plant floor is specific to your operations, and that manpower is in very high demand. According to a Oct. 15, 2012 USA Today article, a Boston Consulting Group report found that globally, 58 percent of high-skill manufacturing and engineering job openings remain unfilled for at least three to six months, and there is also a mild skills gap in the United States. Some manufacturers have noted that the cost of labor overseas is increasing and conformance to heightened and evolving regulations is difficult to ensure from abroad. More regulations mean greater attention to detail, and that drives costs up overseas. In other words, global manufacturers who in the past enjoyed lower wage costs from labor arbitrage overseas may now find the gap between salaries and compensation has diminished and potentially been negated.

Reshoring means more manufacturing jobs for U.S. and Canadian citizens. Same goes for expanding current domestic production. The goodwill that can be cultivated from this is significant, driving up your brand equity. But manufacturers remain capitalistic by nature and measure success by focusing on top- and bottom-line growth. That requires workers in existing or net-new domestic manufacturing jobs to be as effective, efficient and productive as possible.

As with the assets example above, mobile technology can ensure the right people are dispatched to the right tasks all the time. Their time is more efficiently spent as they can receive or send alerts from anywhere in the plant floor. Getting operators out of the control room and away from wired workstations lets them handle additional tasks. They can access schematics for a machine on their head-mounted computer or ruggedized tablet. A single worker equipped with enterprise-grade mobile tools can cover more area on the plant floor than one without access to those same tools.

Materials

Raw material needs to be accurately traced, processed and managed for quality control. According to March 4, 2011 BBC News report, consumers are 12 percent more likely to purchase a product with materials that can be traced. Vendor management, regulatory compliance, batch and lot traceability, deep supply chain collaboration with all partners: all of these elements come into play when optimizing the flow of raw materials into your plant, as well as the flow of finished goods out of your plants. Increased domestic production capacity can help manufacturers better realize the benefits that can come from greater visibility and control over these materials, but often this requires investment in new technology.

Devices such as radio frequency identification (RFID) tags and barcode scanners can allow for better tracking and data capture throughout your supply chain: from your suppliers into your raw materials warehouses, to a replenishment order from your plant, to adding those materials to a batch or lot, and to a finished product which conforms with your own quality standards and external regulations. In the case of a supplier issue or recall, employees can be easily dispatched through radios or mobile computers with the data in their hands to make an immediate change, increasing efficiency, quality and safety and limiting the impact of the issue. This potentially can be a major cost savings for your operations, as errors will be reduced and agility to respond to rapidly changing market conditions can be enhanced.

In addition, with mobile technology, an operator or a quality technician can examine work in process or finished goods and easily compare them to specifications on a ruggedized mobile tablet. They can make adjustments to the process to ensure conformance to quality specifications in order to minimize scrap losses and maintain customer satisfaction.

Reshoring or expanding current domestic production may be the right choice for your manufacturing operations. You need to carefully consider how it would affect your assets, people and materials and perform a cost-benefit analysis to see if it makes sense for your organization. Mobile technology and the industrial wireless network to support the applications can help improve the profitability of reshoring production capacity back stateside or expanding existing domestic capacity by minimizing unplanned downtime, enhancing worker productivity, and improving control over goods and materials within your supply chain. No matter where you fall on the reshoring discussion, the manufacturing renaissance is very real. Mobility is an integral part of this exciting new era of profitable production.

Source: Motorola Solutions


Keywords: supply chain management, supply chain management IT, RFID, mobile logistics solutions, supply chain solutions, mobile communications, enterprise mobility

What factors are driving the revitalization of domestic manufacturing? There are several benefits increased domestic manufacturing capacity can bring, ranging from political to economic. Offshore plants and factories may struggle today with a lack of visibility in their upstream and downstream supply chains, and reshoring may bring additional control and insight. Over the last decade, the cost of transportation of goods has risen with higher gasoline prices. So while pure manufacturing costs may still be lower for offshore plants, the total landed cost may not be lower. International labor costs have grown enough to reduce the savings that were previously realized when manufacturing was originally sent overseas.

The cost of disruption of work due to labor issues is another consideration, as well as the risks associated with loss of intellectual property or nationalization of local subsidiaries of multinational companies. Additionally, failure to meet an evolving multitude of stringent quality controls and regulations can further trigger an analysis to relocate manufacturing operations that are currently overseas.

But do the potential benefits outweigh the potential cost increase of reshoring or expanding production in the U.S.? Your organization needs to find out if it can equalize cost benefit in its favor. For any domestic manufacturing plant, profitability will ultimately be tied to how efficiently it can be run. Often, that focus on efficiency translates into a larger opportunity for technology to play a role in optimizing performance for domestic plants than in their international counterparts. Today's technologically equipped plants will require the automation and mechanization investments of the past decade along with the ability to scale and multiply those technological forces through mobility tools for the skilled workforce.

Mobility can act as a force multiplier for a manufacturer.  However, a comprehensive mobility strategy requires more than just one radio, one mobile computer, one wireless network, or one barcode scanner. An integrated suite of solutions can dramatically transform your plant floor and increase its efficiency, enhancing the profitability of your reshored or expanded domestic capacity.

There are three main elements of a modern manufacturing plant that can benefit from a comprehensive mobility strategy: assets, people and materials.

Assets

Your assets are the significant capital investment that keeps your business running. From the machines along your production line to your lift trucks, each plant floor has numerous assets to keep track of and maintain. Delays to repair or replace equipment can lengthen unplanned downtime, and greatly affect your bottom line as production slows or even stops. A recent study by Coleman Parkes Research Ltd, on behalf of Computer Associates, pegged the average cost of unplanned downtime as high as $196,000 per hour, but this will vary greatly based on the capacity of the plant and the specific segment of manufacturing. Also, domestic manufacturers are faced with a significant shortage of skilled technicians that can serve and support their production equipment. A large number of current technicians are increasingly entering or nearing retirement. Thus, the focus turns to ensuring new maintenance and production employees have what is needed at the point of work to make the right decisions and do the job required of them, so that your production equipment can perform at the level you require in order to meet performance targets for profitability and growth.

To help facilitate these real-time decisions, deeply integrating mobile technology and automation is a major key to getting the most out of your equipment. Devices such as mobile handheld computers or enterprise-grade tablets keep operators connected to operations throughout the plant floor. They are provided immediate access to critical information, alarms, alerts and automation control with mobile human-machine interfaces for monitoring and troubleshooting.

For example, let's say there is a fault with a piece of equipment on the plant floor. An operations manager will receive an alert on his mobile device indicating the specific problem and dispatch the appropriate technician to make an immediate repair. The technicians are enabled by mobile devices or two-way radios to inform them of the malfunction and the urgency to repair the machine. The technician now has enough information to arrive at the fault location with the proper tools and parts. Downtime is reduced, production can go on and efficiency continues to increase as not just any technician, but the right technician, is sent to fix the problem before it cascades and expands into other areas of operations in the plant. For less experienced maintenance technicians, video collaboration with remote experts on the mobile device at the point of activity provides real-time support and training.

Whether you depend on reactive maintenance, scheduled maintenance, or predictive maintenance to keep your assets up and running, providing mobile access and extensions to your human-machine interface, operator rounds, and maintenance records can help your domestic plants run more efficiently and increase profitability.

People

Your people are what make your plant floor work. The manpower and level of skilled labor you need on the plant floor is specific to your operations, and that manpower is in very high demand. According to a Oct. 15, 2012 USA Today article, a Boston Consulting Group report found that globally, 58 percent of high-skill manufacturing and engineering job openings remain unfilled for at least three to six months, and there is also a mild skills gap in the United States. Some manufacturers have noted that the cost of labor overseas is increasing and conformance to heightened and evolving regulations is difficult to ensure from abroad. More regulations mean greater attention to detail, and that drives costs up overseas. In other words, global manufacturers who in the past enjoyed lower wage costs from labor arbitrage overseas may now find the gap between salaries and compensation has diminished and potentially been negated.

Reshoring means more manufacturing jobs for U.S. and Canadian citizens. Same goes for expanding current domestic production. The goodwill that can be cultivated from this is significant, driving up your brand equity. But manufacturers remain capitalistic by nature and measure success by focusing on top- and bottom-line growth. That requires workers in existing or net-new domestic manufacturing jobs to be as effective, efficient and productive as possible.

As with the assets example above, mobile technology can ensure the right people are dispatched to the right tasks all the time. Their time is more efficiently spent as they can receive or send alerts from anywhere in the plant floor. Getting operators out of the control room and away from wired workstations lets them handle additional tasks. They can access schematics for a machine on their head-mounted computer or ruggedized tablet. A single worker equipped with enterprise-grade mobile tools can cover more area on the plant floor than one without access to those same tools.

Materials

Raw material needs to be accurately traced, processed and managed for quality control. According to March 4, 2011 BBC News report, consumers are 12 percent more likely to purchase a product with materials that can be traced. Vendor management, regulatory compliance, batch and lot traceability, deep supply chain collaboration with all partners: all of these elements come into play when optimizing the flow of raw materials into your plant, as well as the flow of finished goods out of your plants. Increased domestic production capacity can help manufacturers better realize the benefits that can come from greater visibility and control over these materials, but often this requires investment in new technology.

Devices such as radio frequency identification (RFID) tags and barcode scanners can allow for better tracking and data capture throughout your supply chain: from your suppliers into your raw materials warehouses, to a replenishment order from your plant, to adding those materials to a batch or lot, and to a finished product which conforms with your own quality standards and external regulations. In the case of a supplier issue or recall, employees can be easily dispatched through radios or mobile computers with the data in their hands to make an immediate change, increasing efficiency, quality and safety and limiting the impact of the issue. This potentially can be a major cost savings for your operations, as errors will be reduced and agility to respond to rapidly changing market conditions can be enhanced.

In addition, with mobile technology, an operator or a quality technician can examine work in process or finished goods and easily compare them to specifications on a ruggedized mobile tablet. They can make adjustments to the process to ensure conformance to quality specifications in order to minimize scrap losses and maintain customer satisfaction.

Reshoring or expanding current domestic production may be the right choice for your manufacturing operations. You need to carefully consider how it would affect your assets, people and materials and perform a cost-benefit analysis to see if it makes sense for your organization. Mobile technology and the industrial wireless network to support the applications can help improve the profitability of reshoring production capacity back stateside or expanding existing domestic capacity by minimizing unplanned downtime, enhancing worker productivity, and improving control over goods and materials within your supply chain. No matter where you fall on the reshoring discussion, the manufacturing renaissance is very real. Mobility is an integral part of this exciting new era of profitable production.

Source: Motorola Solutions


Keywords: supply chain management, supply chain management IT, RFID, mobile logistics solutions, supply chain solutions, mobile communications, enterprise mobility