According to a Thomas survey about COVID-19’s impact on U.S. manufacturing and industrial production, 64% of manufacturers are likely to bring production back to North America. It has gone beyond talk to action. Clients and colleagues are seeing an increase in inquiries related to reshoring and expanding manufacturing capabilities.
Even before COVID-19, executives were interested in reshoring. The total cost has come into alignment (and is often preferred) in North America for non-commodity products. Tariffs exaggerated the situation, prompting executives to consider the investment of capital to repurpose, expand and build manufacturing capabilities. When inventory carrying costs, transportation costs, intellectual property costs, management and overhead costs, logistics costs and many others are considered, the equation often flips on its head. Excess inventory also ties up cash unnecessarily.
Although costs are relevant to remain competitive in the global economy, it is even more compelling when executives look at the customer side of the equation. In today’s Amazon-impacted, fast-paced environment, customers expect immediate delivery of customized products and services with the ability to change orders based on the latest customer and consumer requirements at the last minute. The last mile has become the last minute. In fact, customers not only expect to change orders while products are out for delivery, but they also expect easy returns and replacement products as a typical standard of service.
Read more about product supply strategy and related concepts in our eBook, Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you’d like a rapid assessment and recommendations for your situation, please contact us.