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Ready. Set. Reshore. The Challenges (And Rewards) of Onshoring

To meet the growing demand that reshoring will bring, I believe that contract manufacturers here in the U.S. should focus on two things: Reducing the lead-time of production and improving supply chains.

As a contract manufacturer, I have dedicated my career to building and sustaining a company in an industry that, until recently, had structured its business model around sending the majority of its contracting business overseas.

I say until recently, because put a finger to the wind, and things seem to be shifting. There’s concrete evidence to support this observation, too:

  • By the end of 2014, it is predicted that 20 percent of Asia-sourced finished goods and assemblies consumed in the U.S. will have shifted from China to the Americas (source: Gartner, December 2011).
  • Companies focusing on reducing inventories and improving just-in-time delivery practices are making the liabilities presented by global supply chains a driving force in this shift (source: Bloomberg Businessweek, February 2012).

To meet the growing demand that reshoring will bring, I believe that contract manufacturers here in the U.S. should focus on two things: Reducing the lead-time of production and improving supply chains. That’s a tall order (successfully managing what happens both on and off the production floor is no small feat), but by stepping back to evaluate where you are and where you want to be, it can be done.

Following are some of the strategies that my team is employing to scale up for increased productivity, plus a couple of my “Measurable Milestones” to help jumpstart your own success.

Inherent Challenges, Effective Solutions

Remember the saying, “You can have it fast, cheap, or good – pick any two”? This expression often comes to mind when I’m in a negotiating situation with a client who, naturally, would rather not have to choose between speed, price and quality.

But it is possible to meet a tight delivery schedule while still turning out high-quality products — without eating into your profits. The secret lies in adopting modern manufacturing method developed by Toyota. This entails not simply copying Toyota, but, rather, understanding lean principles and adapting them to the needs of your organization.

That’s just what Evolve Manufacturing Technologies did recently when we contracted with Ydatum Operations Management Engineering President Olivier Larue, an expert in lean manufacturing who has over 25 years of experience helping teams design and implement industrial engineering and managerial business solutions.

Olivier came to Evolve with one objective: to make our business more efficient and adept at scaling up the management of high variety and low volume as quickly as possible. For me, this was a crucial offering; after all, if we are to keep up with the demands of reshoring, operations on the production floor will require an approach that’s faster and more efficient.

Bringing with him the expertise he acquired providing lean manufacturing consulting services to Toyota, Merck, Nike, and Genentech, among many others, today, Olivier is helping us refine — and redefine — how we do business. Our goal? To be competitive in five key areas:

  1. Employee development
  2. Production quality
  3. Lead time of supply
  4. Cost of services
  5. Innovation

As with any undertaking, the inherent challenges in each of these five areas are considerable. But under Olivier’s guidance, I’m confident that effective solutions to these challenges will present themselves.

Measurable Milestone: How prepared is your shop to handle reshoring? When it comes to the five key areas of manufacturing success listed above, where are your strengths? Challenges? And is your company equipped with the leadership it needs to build on strengths and overcome challenges? 

Links in the Chain

No amount of scaling up on the shop floor will matter if the supply chain relationships you’re relying on aren’t strong. After all, when it comes to manufacturing, your company’s ability to deliver is tied to the performance of its suppliers.

What’s the solution? Building and maintaining strong supplier relationships with a targeted, tailored alliance management program.

To create such a program, you’ll first need to train key suppliers in your chain and implement protocols that will foster transparency and a collaborative spirit that will keep things moving when the unexpected occurs.

Next will be maintaining strong communications throughout the supply chain. I often say that if you will treat suppliers as allies and keep them in the loop, you’ll be well on your way.

Finally, your alliance management program will need to have performance metrics in place that measure each members’ success and identify areas of improvement. Armed with this information, your supply chain will streamline and strengthen.

Measurable Milestone: How strong is your supply chain? Are you prepared to address the inevitable challenges that will arise? Do you have communications standards and performance metrics in place to measure how well your suppliers are doing and keep the flow of information going?

The Future of Onshoring

From where I sit, the future of onshoring for U.S. manufacturers is a bright one. To capitalize on the opportunities it presents, now is the time to implement lean manufacturing strategies and strengthen your supply chain. Do so, and watch your company thrive in this growing marketplace as a result.

Noreen King founded the Silicon Valley-based Evolve Manufacturing Technologies in 1999 to serve as the on-shore contract equipment manufacturer for the medical, biotech, defense and semiconductor industries.