In the last few decades, companies have moved their manufacturing operations offshore to cut costs related to production. This was due to the attractiveness of low labor costs in countries such as China that enabled companies to achieve higher profit margins. However, in recent years, the manufacturing industry has seen a shift towards reshoring those operations as labor costs and uncertainties surrounding customs are on the rise.
Recently, the effects of the COVID-19 pandemic has highlighted the risks associated with offshoring operations. It became evident that disruptions in offshore operations could affect the global supply chain. As countries like China became affected by the pandemic, US-based companies with operations overseas were affected even before the virus arrived in the US.
More and more companies are realizing the risks associated with offshoring and are looking into reshoring operations to prevent such disruptions in the future.
Advantages of Reshoring:
- High Product Quality: Reshoring allows companies to have greater control over the production process. Additionally, stricter regulations and standards may be required to ensure that the highest quality of products is available to the consumer.
- Competitive Advantage: Consumers tend to be attracted to products that are produced locally. A study from the Perception Research Services indicated that consumers are more likely to buy products that have a “Made Locally” label on them. In the minds of consumers, locally-manufactured products are of higher quality which increases the likelihood that consumers will pay more for those products.
- Reduced Risk: As operations are brought closer to home, there is a reduction in the complexity of the supply chain. This has the additional benefit of reducing the risks associated with shipping and customs. It also means that you have more immediate access to all of the steps involved in the production.
- Reduction of Time Zone Differences: An added benefit of reshoring is that the majority of the operations are performed in the same (or similar) time zone. This can allow manufacturers to solve issues before they disrupt the manufacturing process as the collaboration between individuals in the same time zone is faster.
These are just some of the advantages that come with reshoring operations. Of course, not all industries are able to immediately start this process. However, some industries such as those manufacturing automobile parts, aerospace parts, communication devices, and navigational devices could soon start the process of reshoring.
Advanced Planning and Scheduling (APS) Software
Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.
With APS you can:
- Create optimized schedules that balance production efficiency and delivery performance
- Maximize throughput on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to resource capacity
- Enable scenario data-driven decision making
The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system.