Things to Consider Before Reshoring

9/16/20 10:30 AM

In previous years, companies have turned to offshoring their operations to cut costs and maintain their competitive advantage. Recently, disruptions in offshored operations due to the COVID-19 pandemic have highlighted the risks on the global supply chain. US-based companies with operations in China were affected long before the virus arrived in the US as operations overseas were halted. Additionally, the rising cost of labor in offshoring countries has made many companies consider reshoring their operations.

Reshoring consists of bringing back operations that were sent overseas back to the country of origin of their parent company. While reshoring can bring many advantages to a company, it is important to also consider the challenges that can arise.

the things to consider when reshoring operations

The Challenges of Reshoring: 

  1. Availability of Supplies: It is important to consider whether you are able to procure your raw or intermediate materials at your new location. Having to import these materials may incur additional costs that could reduce the profit margin.
  2. Availability of Skilled Workers: Another consideration is the availability of skilled workers in the location you want to reshore. Although reshoring can create jobs, it can be a challenge to find suitable workers to fill the available positions. 
  3. Technical Expertise: Similarly to the last point, it is important to consider whether you have access to skilled technicians that are able to install and set up the machinery required for production. Another consideration is whether you are able to transport the equipment necessary or whether it would be more effective to purchase new equipment for the new facility.
  4. Potential Disruption to Production: One of the major things to consider when reshoring your operations is the fact that you may need to halt production during part of the process. This means that you may not be able to meet customer demands which could result in the loss of customers and profits.
  5. Increase in Automation: Reshoring your operations may require the need to increase automation to cut production costs. This may require the need to redesign production lines and may incur a large cost to acquire the necessary machinery.

 

It is important to weigh the benefits against the costs before making a decision that could dramatically impact your business. The bottom line is that not all companies will be able to reshore their operations right away. However, manufacturing companies that produce automotive parts, aerospace parts, navigational devices, and communication devices are said to be ready to reshore their operations immediately. 

 

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. 

Related Multi-Plant Video

 APS Resources

Topics: multi-plant, challenges in supply chain, supply chain threats, Industry Trends, Demand planning, coronavirus, reshoring

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