Forbes recently published an article discussing GE’s re-shoring efforts.
Though the article focused on GE, Jeff Immelt, and the need for a paradigm shift in management for manufacturing in the U.S to be successful, we believe the recent shift toward U.S manufacturing is neither new, simple or radical. It is fundamental. Companies need to evolve and adapt in order to best compete globally. Manufacturers need to be constantly evaluating their “true cost of ownership”. If costs support re-shoring to the U.S. then an effort should be made to do so.
Many of our clients would like to make their products in the U.S. and there is growing evidence that supports U.S manufacturing. But it is not just about just being “made in the U.S”, it has to make economic sense.
We agree that it starts with the management thinking and culture. What’s important to your customers and other stakeholders should define goals and objectives. Once this is established we recommend the following steps:
With the objectives and goals established you can determine your true cost of ownership. It’s important to look at what factors needed and how it impacts your true cost of ownership. Some factors that are sometimes overlooked are Intellectual Property, Political Stability, Innovation speed, Support Time, Process technologies, Employee skills, and Material availability
2. Product Launch:
If you have new production or have a need to move current production, the next step is to prepare a plan to make it happen. This plan includes looking at design reviews, engineering needs, sourcing, supply chain management, quality plan, testing, and production trials.
This is the execution stage. It’s all about production and delivery of the product to the customer. It has to be the right product, at the right time, at the right price.
4. Life Cycle management
Your competitors do not stand still. Innovation requires looking at next generation products, continuous improvement and cost reduction opportunities. What makes sense today may not make sense later.
We believe that U.S manufacturing will continue to rebound. But we also believe that a company needs to understand their true cost of ownership in order to make the best decision on where a product is made.