RESHORING MANUFACTURING

Possibility or Just a Pipe Dream?




Reshoring manufacturing is essentially the reverse process of offshoring, where manufacturing (or other functional areas, typically Shared Service functions, e.g. IT, Customer Service, Accounting, Human Resources) are moved to other countries where labor is cheaper.

“Make America great again!”  This campaign slogan of President Trump has been become so popularized that it now exists as a hashtag on social media: #MAGA.

But, what does it mean? 

The core driver to the premise of making America great again is to reintroduce manufacturing back into the United States—a concept known as Reshoring Manufacturing. 

For the last 20 years, driven by globalization, American businesses have been aggressively offshoring manufacturing.  This has allowed companies to significantly reduce manufacturing costs, while also gaining access to emerging markets, such as the Greater China Region, Southeast Asia, and South America. However, this increase of jobs abroad has come at a cost, leading to massive unemployment in the U.S.

After the recession of 2007, there was an increase pressure from the American public to bring jobs back to the U.S.   Now, in 2017, the initiative to bring jobs back has become a top priority on the President’s agenda.

“The President’s support of reshoring can be a huge opportunity for many family-owned businesses, especially those involved in manufacturing operations,” according to leading family business expert Don Schwerzler, founder of the Atlanta-based Family Business Institute.

But, is reshoring manufacturing possible?  Or just a pipe dream?

It turns out, in our increasingly digital age, technological advancements have made reshoring manufacturing back to the United States both cost effective and possible.  Robotics, automation technologies, and even artificial intelligence has tilted cost efficiencies back in the favor of domestic production.

The caveat is not all jobs will be returning.  Rather, much of the old manufacturing jobs are now replaced by “robots.”  In fact, the Robotics Process Automation (RPA) also known as Robotics Revolution, market has been growing incredibly fast.  RPA has been doubling every 6 months and by 2020, the RPA market is expected to reach $5B. 

Even without RPA, traditional automation from software has facilitated the process of manufacturing reshoring in the US.  Let’s look at a specific example: The Auto Parts Manufacturing industry.

The manufacturing supply chain for the Auto Industry is densely populated by family-owned businesses.  It is also an industry that has strict quality management standards, which have been set by the regulatory body IATF (International Automotive Task Force), formerly ISO, and large automotive companies through AIAG (Automotive Industry Action Group).  These quality standards include IATF-19649 (former ISO/TS-16949), VDA, EAQF, among others.

Traditionally, to comply with these standards, auto part suppliers have been maintaining records and reports using spreadsheets and document editors, which have led to highly manual processes.  Due to the multitude of regulations, product variations, product customizations necessary to fulfill orders, worksheet-driven processes are almost always riddled with inconsistencies and inaccuracies caused by human errors.  Many companies literally are unable to pass quality check audits.

To remedy this, some auto part manufacturers have begun to utilize Auto Parts Product Lifecycle Management (PLM) software, such as ISOQualitas.PLM . Compared to a spreadsheet-based system, ISOQualitas.PLM can reduce the time to develop a complete APQP by over 80%.

In general, software and RPA technologies create value for companies across 4 main areas:

  • Improved employee satisfaction and retention;
  • Improved customer satisfaction and loyalty;
  • Accelerated productivity gains; and
  • Enhanced compliance.

These benefits translate directly into improving a company’s bottom line.  Employees reduce time spent on more tedious, manual tasks, thus freeing up their time and energies for more value-added, intellectually stimulating, and rewarding tasks.

If you are a family business owner and would like to explore how you can take advantage of the trend in reshoring to grow your business, simply use the Ask The Family Business Expert form at the bottom of this page!


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