Reshoring improves service while reducing supply chain risk
Since the demands on the supply chain during and just after the pandemic heightened the attention on how we manufacture and deliver goods, there has been quite a movement to bring manufacturing and distribution closer together in what is known as "reshoring."
As a leader in the fastener industry, Optimas has been embracing this trend quite substantially over the last two years to improve service to our customers and suppliers while reducing risk within the supply chain.
While we feel in many ways we are leading in this trend, particularly in our industry given the manufacturing and distribution assets we already have in place, others in manufacturing are following suit. In fact, UBS Bank examined the reshoring trend when it polled more than 1,600 executives earlier this year.
According to their research published on March 2, many senior executives in different sectors intended to move parts of the supply chain closer to home -- 78% in Europe, 70% in the U.S. and 54% in China plan to do so.
Optimas has been working to improve its overall operations as we have re-emphasized our unique positioning in the industry of having strong global manufacturing and supply chains. And that will get even better as we have some significant plans for improving this "dual threat" in North America in the first quarter of 2024.
Our philosophy is simple. We see direct manufacturing and distribution as complementary strategies and a competitive differentiator for our customers and our suppliers. Further investment here serves an increasing need for North American regional sourcing strategies for onshore/nearshore capacity/fulfillment. This effort also draws on Optimas' established manufacturing in other parts of the world with a collective 50 years of production experience.
More than ever before, resource availability has given way to accessibility in the form of localization, which reduces lead time and risk, enhances opportunities for future innovation and boosts the quality of a customer's final product. Simply put, your supplier is only as good as its ability to source and deliver parts as specified.
There are several benefits that onshore manufacturing offers the opportunity to streamline supply chains and reduce risk:
1. Access to higher-quality materials when sourcing close to home.
Choosing to source closer to home can give you some peace of mind about the quality of the materials you're receiving, reducing manufacturing costs and bringing consistency and predictability to your supply chain.
2. Fewer inventory surpluses.
According to studies in demand and consumer trends, you can improve cash flow by keeping less inventory on-site and making orders more flexible.
3. Better, more localized customer service.
Hosting production and customer service in the same location means you can provide buyers with more personalized and efficient customer service.
4. Shorter lead times.
The most significant distinction with onshoring is saving time. You automatically streamline your supply chain when you cut out global shipping times, delays, and customs clearance.
5. Reduced risk.
Before the pandemic, there was a push toward globalization of materials that allowed for more budget-friendly products due to low-cost manufacturing, making the inherent risk worth it due to the cost efficiency. Sadly, the global pandemic has highlighted how detrimental it was to disregard risks.
So what onshore strategies for more supply chain stability would we impart to other manufacturers?
• Be flexible ... in the materials you use and source them locally.
• Be agile ... with your supply chain and particularly with your suppliers.
• Be strategic ... with the supply chain partners you work with.
• Plan ahead ... the importance of good data is paramount because it allows you to confidently predict aspects of the supply chain and makes you more prepared.
• Build trust and communication across the supply chain ... transparency matters now more than ever.
• Go with experience ... collaborating with an experienced partner that's been here before carries extra weight.
As the onshoring trend builds more steam over the coming years, Optimas wants to be a leading example of how to do it right in the manufacturing industry. Others can do the same thing with the right strategy, desire and execution.
• Daniel Harms is CEO of Optimas, Americas.