Tuesday, November 02, 2004
Is "Onshoring" the next big trend?
Recently, we've started to see metal stamping and forming jobs come back "onshore" from, amongst other places, Asia and Mexico. In one case, the issue was reliable supply chains (see the next 3 articles about bottlenecks at the major North American Pacific Ocean ports).
In another case, quality was an issue.
In a third case, the amount of supervision required to ensure quality wiped out the expected savings.
We also have heard recent news of interest rate hikes, infrastructure problems, energy shortages and potential econological problems in some of these areas (many of these issues were reported in this BLOG). Add to this the pressure China in particular is under to let their currency float, and we are left with a very unpredictable delivery and cost environment to be outsourcing production into.
Perhaps the jobs shouldn't have moved offshore in the first place.
We, like many suppliers, are under near-constant pressure to reduce the cost of our parts. We see many parts which make inefficient use of resources, either raw materials, post-processing, machine time or downstream resources like assembly time on the line.
Time and again, we see these parts, not redesigned to make better use of resources, but rather merely re-sourced to a place where wastefulness can be accomplished more cheaply.
That is, the scrap material or the wasted time is not reduced, it is merely achieved at a lower labour cost.
So it perked up our ears when we ran across this article in CRM Buyer:
Before You Move It, Improve It
Before you commit to moving a segment of your corporation overseas, pour your energy into significantly improving it. You may find that your efforts make the operation so cost-effective and so high-quality that you don't have to send it overseas. Either way, your improvement efforts will not have been wasted, says author Tom Devane.
Communication lapses, quality shortfalls, poor connection with customers -- these problems and others plague manufacturers who have taken the offshoring leap. And in the end, says a leading process improvement consultant, many companies discover that it would have paid to look a little closer before they leapt.
In another case, quality was an issue.
In a third case, the amount of supervision required to ensure quality wiped out the expected savings.
We also have heard recent news of interest rate hikes, infrastructure problems, energy shortages and potential econological problems in some of these areas (many of these issues were reported in this BLOG). Add to this the pressure China in particular is under to let their currency float, and we are left with a very unpredictable delivery and cost environment to be outsourcing production into.
Perhaps the jobs shouldn't have moved offshore in the first place.
We, like many suppliers, are under near-constant pressure to reduce the cost of our parts. We see many parts which make inefficient use of resources, either raw materials, post-processing, machine time or downstream resources like assembly time on the line.
Time and again, we see these parts, not redesigned to make better use of resources, but rather merely re-sourced to a place where wastefulness can be accomplished more cheaply.
That is, the scrap material or the wasted time is not reduced, it is merely achieved at a lower labour cost.
So it perked up our ears when we ran across this article in CRM Buyer:
Before You Move It, Improve It
Before you commit to moving a segment of your corporation overseas, pour your energy into significantly improving it. You may find that your efforts make the operation so cost-effective and so high-quality that you don't have to send it overseas. Either way, your improvement efforts will not have been wasted, says author Tom Devane.
Communication lapses, quality shortfalls, poor connection with customers -- these problems and others plague manufacturers who have taken the offshoring leap. And in the end, says a leading process improvement consultant, many companies discover that it would have paid to look a little closer before they leapt.
