The May 22, 2015, Thomasnet blog reported a welcome trend in bringing back “Made in America” for manufacturing. This appears to be, as the blog notes, a complete turnaround in US manufacturing. The turnaround is driven by both companies seeking US based suppliers as well as companies making commitments for “made in the US” products or components.
Proficient Sourcing is vitally interested in reshoring; we supply (almost) exclusively US candidates for buyers seeking new suppliers. So companies looking to localize will find us eager to help, and we have a large network of supplier possibilities for your consideration—click here for a list of most of our shops’ capabilities.
The Thomasnet blog reports a great number of factors contributing to the “meteoric rise” in reshoring. Just some of these are the lead-time advantage, more agility in customer requests, flexibility in customization, cheaper shipping, (not to mention no concern about dock strikes), and significantly reduced concerns about intellectual property security.
Combining these factors with the energy boom, there is also a trend to start or relocate entire operations on our “home territory”. All this should be very good news.
While small businesses can share in the reshoring advantages, the blog reports that “recent research shows more and more industry giants bringing work back to American shores, with the list including Walmart, Apple, Caterpiller, Ford, and GE. In fact, industry events like Walmart’s US Manufacturing Summit are encouraging suppliers in the United States”.
We will have more reshoring information in future newsletters. Stay tuned for that!
In case you are looking to connect with more US buyers for your business, there is a “Investing in American Jobs”: Walmart Summit, taking place July 7-8 in Bentonville, AR. www.2015usmanufacturingsummit.mybusinessmatches.com is the link for more information on this event.
Obviously, decisions to reshore or even offshore, for that matter, are major strategy issues for any company. Such decisions would seem to suggest the procurement function needs to be more a strategic organization, and more than just order takers and issuers of purchase orders.
In that vein, Directworks.com (https://www.directworks.com/sourcing-software)reported on some highlights from the 100th annual Institute for Supply Management Conference. From the opening session an Adobe System discussion about “Procurement Value” featured commentary on the journey to become strategic.
The beginning of this journey is answering the question “is my sourcing organization built from the top down or bottom up?” To understand the difference, it is necessary to examine two competing approaches manufacturers often take with these four building blocks:
-People skills
-Process & Tools
-Sourcing Stragegy
-Your company’s business objectives
The Directworks report notes “in the first approach [top down] leadership builds a sourcing organization by hiring traditional purchasing talent, implements processes and best practices that support traditional sourcing objectives, provides cost-effective tools to improve efficiencies, and then, after all of this is in place, takes on the challenge of supporting the line of business needs. Sourcing organizations built in this manner are often viewed as having limited flexibility and they usually have a hard time straying from a primary focus of minimizing cost.” We would think such organizations might have difficulty dealing with the complex issues of reshoring. After all, the factors involved may operate over a long time frame, while normally there is a dominant focus on short term best price.
The report continues, “In contrast, a number of manufacturers have flipped the model. They begin with the business objectives, (such as increasing new product launches by 30%…). Business stakeholders and sourcing teams work closely together to determine the appropriate sourcing strategies. Practices and tools are selected based on their ability to enable business objectives, and new skill sets are introduced to strengthen the team’s ability to meet those objectives. In this approach, the business goals come first and drive the transformation of the sourcing group.”
This is but a very brief summary of the Thomasnet blog and the Directworks report. The next few years do appear to offer great opportunity for US manufacturing, and we will be paying attention to future articles that provide food for thought for procurement professionals. We would welcome your comments and encourage you to do so.