Are you “Reshoring” products or parts of your supply chain? What is the right way, and what are the right tools to use to do this successfully?
If your company is bringing products back from overseas to make them in North America, you are in good company. According to Kearney’s 2021 Reshoring Index, “An overwhelming majority of American companies with production operations in China have already moved some back to the US or plan to do so in the next three years.” Companies like GM, Intel and US Steel are spending billions (with a “B”) to open new factories in the US.
The reasons have been in the headlines of the news for the last 5 years: tariffs on China, pandemic, war in Ukraine. These are long-term strategic reasons to build new plants and to establish whole new shorter supply chains. The question is how can you prepare for this transition and mitigate risks?
North American companies can compete successfully, but they must use different tools and use them better than companies in low cost overseas countries. Your first thought might be that we should automate, add technology, use lasers, and vision systems. This will be part of the solution, but only if applied smartly. Automating a bad process, just makes bad parts faster. Vision inspection just prevents bad parts from being shipped. They are still internal scrap that has wasted all the resources that went into making it!
To compete successfully in this environment requires a focused shift from reactive to proactive tools. These tools can look like a lot of things, but the key tools that The Luminous Group has found to help clients are:
- Design and Process Failure Mode and Effects Analysis (FMEA)
- Cross-functional Product and Process Development Teams
- Cross-functional Problem Solving and Continuous Improvement teams
- Frequent Layered Process Audits (LPA) to verify Work Instructions and other Standards
Used effectively, these tools identify risks early, determine the best practice to minimize the negative effects and then hold these best practices in place.
Unfortunately, we have seen many companies misapply these tools or worse — try to apply these tools without leadership commitment. The Luminous Group works with company leaders to help them understand their role in the successful implementation of these key tools. Leaders can then instill the “why” of these tools to their team and motivate employees to take the time to apply them. Well-supported and well-trained teams can then evaluate the new projects and successfully launch them here in North America.
We have a generational opportunity. Do not miss it because you were not ready with the right commitment, culture, and tools to mitigate the risk of reshoring.