Coming Ashore: Why Bringing Manufacturing Home is Trending
Jul 12, 2023
More and more, companies have been grappling with the impacts of shortages of components, materials, and labor, as well as long delays in the transportation of goods. In the wake of the global pandemic, supply chain disruptions have made it difficult for manufacturers to keep up with demand. These and other factors have brought into focus the trend of bringing manufacturing home to the United States. This process of re-shoring or onshoring has the potential to offer cost savings, product quality improvements, and faster production times — all of which could benefit manufacturers who are struggling to remain competitive in today’s market.
Supply Chain Disruptions
The pandemic highlighted how vulnerable global supply chains can be to unexpected disruptions. A survey conducted by The Boston Consulting Group found that disruptions have impacted 84% of companies with global supply chains. These disruptions caused companies to lose revenue and rethink their strategies. In particular, the survey found that the disruptions have strengthened the trend of reshoring or bringing manufacturing operations back to the United States.
At the same time, the disruptions have also exposed weaknesses in the supply chain. Companies have grappled with increased costs due to supply shortages and transportation delays. These issues have led companies to look for alternative solutions to maintain production levels and remain competitive.
Advantages of Bringing Manufacturing Home
Reshoring has a number of potential benefits for companies. First, it can help to reduce costs associated with maintaining an offshore supply chain. Companies can save money on transportation, labor, and raw materials by keeping operations closer to home. Additionally, production times can be significantly reduced, as goods can be produced and shipped faster when they are closer to their end destination.
In addition to cost savings, manufacturers can also benefit from improved product quality. By bringing manufacturing closer to home, companies can keep a closer eye on product quality and ensure that their products meet the highest standards. This can help to reduce customer complaints and returns, resulting in improved customer satisfaction and increased sales.
Filling the Product Availability Gap
Supply chain disruptions ultimately led to lower sales and market share. Onshore manufacturing can help to fill the product availability gap and ensure that companies can remain competitive in the market. In addition, by bringing manufacturing home, companies can be better prepared for future disruptions. This can help to reduce the risk of supply chain disruptions and ensure that companies are better able to meet customer demand.
Intellectual Property & Security
Offshore manufacturing can pose a significant threat to intellectual property (IP) due to several factors. When companies move their manufacturing operations to countries with less stringent IP protection, they expose their proprietary technologies, processes, and designs to potential theft or replication. These countries may have weak enforcement of IP laws or limited legal mechanisms to address IP infringement effectively. As a result, unscrupulous actors, including competitors or counterfeiters, can easily exploit this situation to gain unauthorized access to valuable IP and reproduce products without repercussions. Moreover, the complex supply chains involved in offshore manufacturing can increase the risk of IP leakage at various stages, such as during the transfer of sensitive information or the production of components by third-party suppliers. Companies engaging in offshore or overseas manufacturing must implement robust (and often expensive) strategies to safeguard their IP rights and mitigate the inherent risks associated with operating in jurisdictions with lower IP protection standards. Keeping manufacturing onshore enhances IP security by leveraging a robust legal system, enabling tighter supply chain controls, and fostering effective collaboration within the company.
Bringing It Home
Bringing manufacturing home to the United States offers several potential benefits to manufacturers like cost savings, product quality improvements, and faster production times. In addition, by bringing manufacturing closer to home, companies can help to fill the product availability gap and be better prepared for future disruptions. For companies looking to remain competitive in today’s global market, bringing manufacturing home is increasingly worth considering.
