Last-mile manufacturing represents "a new generation of supply-chain design," says Duggal. It describes a process whereby products are sourced globally at the sub-assembly level, then brought into the U.S. and configured to meet customer requirements closer to end markets.
In a sense, last-mile manufacturing is another term for postponement, which involves the equipping of generic products with features that meet the needs of local markets. There are some differences, however. In addition to promoting customization, companies are looking to last-mile manufacturing as a means of protecting intellectual property. IP has become less secure as original equipment manufacturers turn to overseas contract manufacturers and other outside entities to produce their goods.
"We argue that supply chains today have been created with the economics of the '80s and '90s," Duggal says. Moreover, recent geopolitical changes are leading many manufacturers to consider relocating production back to the western hemisphere. The concept "brings manufacturing a step closer to the customer," he says.
The practice extends well beyond the equipping of product with power cords or instruction manuals that conform to regional markets. "This is definitely more complex," says Duggal. A manufacturer might be sourcing a printed circuit board from one location, sheet metal from another, and assembling the components in a third. It needs to be constantly analyzing the best places in which to carry out each step in production, then integrate them all at the point of order. A high level of skills is required to meet that goal, he says.
The complexities are well worth the trouble, according to Duggal. For many companies, last-mile manufacturing becomes a competitive weapon. In the end, they can save money, reduce inventories, protect IP and reduce risk - all the while ensuring higher product quality and customer satisfaction.
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