Shoring Up the Future
by Dan McKiernan, on Mar 3, 2022 11:20:54 AM
In a wave of reshoring, digitizing offers a competitive advantage for manufacturers.
One of the most important and impactful trends in manufacturing is the phenomenon of reshoring, as manufacturers that moved production overseas in the past to take advantage of lower costs begin the process of shifting back stateside. Most companies didn’t want to move production offshore—in most cases it was simply a financial necessity because of higher margins. But now, a combination of the rising cost of transportation logistics, combined with the challenges presented by ongoing supply chain strains and disruptions (in many cases made worse by COVID) has prompted growing numbers of manufacturers to get back to their U.S. roots. In the current climate, bringing manufacturing closer to the end user makes a lot of sense. And the advent of new digital tools makes it financially and logistically feasible to bring production back home to the U.S.
The road to reshoring is likely to have a few bumps, however. Manufacturing faces some structural labor challenges, including the demographic difficulties associated with an aging workforce, and the drain of tribal knowledge as larger numbers of older workers retire. Younger employees tend to be more mobile and less likely to stay, with a higher rate of turnover that contributes to the problem of knowledge train and drives training costs higher. Manufacturing also continues to battle a reputation problem. Perceived as low tech or “dirty” by some, attracting promising young talent to fill gaps in the workforce can be difficult. Reshoring typically means going from a low-wage model to a higher wage structure. And with labor costs traditionally one of the toughest line items to address in the budget, that means finding other places to cut costs. But with growing customization demands, new operational efficiencies require significant innovation.
Industry 4.0 technology and the prospect of a digital transformation has enormous promise. Most manufacturers recognize the value of such a move. Manufacturing hasn’t even begun to take full advantage of the things we do with our phones and personal mobile devices every day. Even those that know they need to embrace innovation are finding the way forward tricky. Far too many manufacturers are stuck in the transition process (a phenomenon known as “pilot purgatory”) and aren’t sure how to move forward. That has to change.
Game-changing digitization benefits
At a time when reshoring is sweeping across the manufacturing landscape, digitizing offers not just a way forward, but a sizable competitive advantage over contemporaries who are slower to embrace digital transformation.
Digitization streamlines communication across the enterprise and offers game-changing new operational efficiencies that allow operators to get their jobs done more quickly and with fewer mistakes. It also dramatically decreases the cost and time required to change lines for new products or variations. It improves the employee experience by allowing operators to successfully leverage technology like web-enabled devices, empowering those frontline workers with tech they are already comfortable and familiar with. It introduces a level of automated quality control and data capture that virtually eliminates costly errors and contributes new insights to refine and improve processes and operations. Digitizing standardized work also eliminates the expense and inefficiency of paper instructions and adds a new level of speed, clarity, and flexibility with digital work instructions. Digitization also significantly enhances onboarding and training, reducing training times, eliminating the costly loss of tribal knowledge, and enabling manufacturers to more readily upscale existing workers—leading to a more flexible and diverse workforce.
It’s somewhat of a chicken or the egg dynamic whether the ongoing surge in reshoring has been a matter of financial and logistical necessity or is simply evidence of manufacturers capitalizing on an opportunity to relocate closer to their market, but the bottom line is that it is happening. Reshoring in higher wage areas of the world will require greater levels of efficiencies and subsequent savings that new digital tools and platforms provide. In that context, digitization isn’t just an opportunity, it’s a necessity. For manufacturers looking to take full advantage of reshoring, digitization gives companies the tools they need to not only overcome the unavoidable structural challenges inherent to the reshoring process, but to thrive and gain a competitive advantage in the process.