Considered the “workshop of the world,” China is losing some of its cache’ as an unstoppable manufacturing powerhouse. Rising labor and energy costs are forcing manufacturers just like you to reconsider locating operations to even lower cost labor countries such as Vietnam and Indonesia. For some companies such as Apple and GE, some production is moving back to its roots: the United States. But how do you know when it is time to bring some of your manufacturing back and what products should you manufacture in America?
There are many things that companies must consider when determining the costs and feasibility of reshoring. This is not a roll-back to the 1960s when manufacturing was King in the US. It is about moving forward to rebalance your global supply chains.
Take Apple for example; while they have returned some assembly of products to Silicon Valley, they have done so through their contract manufacturer, Foxconn. They have not reopened their 1970s production sites in Cupertino, CA. But the preponderance of Apple’s manufacturing remains in China, the largest future target market for Apple’s products. It is also where Apple’s supply base is located.
GE, on the other hand, innovated and automated the production of tankless water heaters. GE was able to reopen a manufacturing site in Kentucky where this new product is made for sale in the US market. But it wasn’t easy. Manufacturing these tankless heaters required extensive product innovation and factory automation.
To get ready to reshore your products, you must consider many aspects of the decision. Here are seven important parts of your Supply Chain rebalancing analysis:
Should you completely leave China or other low-cost countries such as Indonesia, Vietnam or Mexico? Don’t think this is the way to go. Instead, rebalance your manufacturing, bringing some back to the US where and when it can be justified.
Read: https://www.sourcingfocus.com/site/newsanalysisitem/4864/
Read: https://bluesilkconsulting.com/supply-chain/
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