Shay Scott, executive director of the Global Supply Chain Institute, and professor in the University of Tennessee’s Master of Science in Supply Chain Management online program, weighs the factors that might influence American manufacturers to reshore production from Asia to the U.S.
The Biden Administration’s “Buy American” policy will bring “needed attention to this issue of supply chain configurations,” says Scott. “It does shine a spotlight in that direction.” But it’s not likely to make a significant difference in manufacturers’ decisions on whether or not to bring production back to the U.S. That consideration is based on a host of other issues with more direct impact on global supply chains, including tariffs, wage rates and the cost of moving goods over long distances.
Change of some sort might well in the air. “It’s well past time for companies to sit down and take a more balanced look at how their supply chains are configured,” says Scott. Too often businesses take a “copycat” approach to their sourcing strategies, or pursue low-cost manufacturing at the expense of other factors that might reduce supply chain risk.
Strategies that worked well for years can become unworkable virtually overnight, especially as a result of unexpected occurrences such as the COVID-19 pandemic. That has been followed by severe congestion at Southern California ports, which handle the bulk of U.S. imports from Asia, as well as at inland rail terminals. “The whole system is just thrown off balance,” notes Scott. “And it looks like for many areas, it’s going to stay that way for months to come.”
Any serious move at reshoring would entail numerous factors and complexities. The current shortage of labor threatens to undermine any such efforts. And there are huge capital costs to consider. “The idea of coming back into this market is easier said than done,” Scott says.
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