“As manufacturers realize what can be achieved with technology such as AI, IoT, robotics, and additive manufacturing, they are sourcing manufacturing closer to the customer to create a customer experience advantage (rapid customization and delivery) with a lower cost base,” comments said Lisa Anderson, founder and president of LMA Consulting Group Inc., based in Claremont, Calif.


Dive Brief:

  • A regional strategic approach is more likely to provide operational flexibility when it comes time to respond to trade disruption caused by shifting economic and regulatory frameworks, according to the Boston Consulting Group’s 2019 Global Manufacturing Cost Competitiveness Index​.​ This is in contrast to locating production in “handful of low-cost countries,” the report concludes.
  • Supply chain managers should balance considerations like cost and infrastructure when leaving China to re-consolidate operations in another low-cost manufacturing country, or reshoring to the U.S. the report said.
  • “Companies are starting to realize that China is not a risk-free alternative anymore,” Johan Gott, senior principal at A.T. Kearney, told Supply Chain Dive. “Even if the U.S. and China will come to an agreement around the current trade negotiations, I think all companies have started to realize that this is a much riskier relationship going forward than we thought.”

Dive Insight:

The report suggests supply chain managers consider placing manufacturing capabilities closer to customers — whether that entails shifting production to a lower cost country in Asia, investing in operations in Mexico or, the less common approach, reshoring to the U.S.

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Published in SupplyChainDive on Feb. 13, 2020