There’s a great deal of discussion these days about “bringing manufacturing back to America,” but apparently very little understanding of what such an effort entails. Bringing production back from offshore manufacturers (aka, “Re-Shoring”) is a great goal, but it typically requires a lot of work and preparation. So, as a public service, here’s an actual re-shoring example of what it took for one WNY company to bring their production back from China.
The Situation
Our client had engaged a Chinese manufacturer to make beds, but subsequently decided they wanted their products made in America for a variety of reasons, including long lead times for trans-pacific shipping, increasing freight costs and quality concerns (but it could easily have included tariffs/trade wars). Our client quickly ran into several challenges that might be considered typical for re-shoring.
Challenge #1, our client no longer had up-to-date drawings or specifications for their beds. Over time the product had evolved and changed as it was produced in China. These improvements and changes had resulted in new drawings and specifications which were created by the Chinese supplier, written in Chinese and held there. It’s hard to build a product if you don’t have drawings and specifications. So, we helped our client to reverse engineer their own product, creating accurate, up-to-date drawings and specifications in English that would be necessary to make their product in WNY.
Challenge #2, our client did not have U.S. suppliers for their materials and components, since the Chinese plant had bought their materials and components from their network of suppliers in China. First, there was a “make or buy” decision: what components should our client produce themselves and what would they buy. Next, for components our client would buy, they needed to identify American manufacturers (ideally nearby in WNY) who could produce those parts and components. We put together bid packages for those items and drew on our knowledge of the manufacturing landscape in WNY to identify possible suppliers for each item that our client needed. But we were not done yet.
Challenge #3, our client was relatively unknown in WNY manufacturing circles since they’d been producing their product in China. So potential suppliers were skeptical about responding to a bid package from our client: Was this just a “check price” that our client would leverage to beat down their existing suppliers? Were the indicated volumes, which would impact pricing, accurate? How quickly would these volumes be reached? etc. We used our credibility to explain our client’s situation to these potential suppliers and convinced many of them to participate by submitting bids.
There are many other considerations in re-shoring that may apply beyond those above: How big a facility will you need? What type of workforce will be required? Will you need additional or new equipment? What is the timing/sequencing of the switch from offshored to re-shored production? Don’t forget communications—to your supplier, to your team, to your customers and/or to others.
The Outcome: In the end, we were able to help our client address all these issues, identify and contract with local suppliers and successfully re-shore their bed manufacturing from China with minimal disruption. With control of their manufacturing and supply chain, shorter lead times and improved quality, our client was able to grow their business.
The Takeaways: Re-shoring presents significant planning and logistical challenges. Small manufacturers play a critical role for re-shoring companies, both large and small, that must create a new, domestic supply chain for themselves. Manufacturing Extension Partnership (MEP) centers, like Insyte Consulting, understand manufacturing and can be a critical partner in re-shoring. The MEP network covers all 50 states and Puerto Rico with in-depth knowledge of their regional manufacturing landscape and nationwide programs like “Supplier Scouting” that can identify potential suppliers anywhere in America.
Insyte wants to help with your business challenges. Please contact us to schedule a visit or arrange a phone call to discuss how Insyte can help.
