Why Manufacturers Should Be Onshoring and How To Do It: Part 2 – 5 Tips For How To Do It Right
For decades, manufacturers have been offshoring—going overseas with at some or all their manufacturing to cut costs and stay competitive. Economic advantages and concerns about quality and supply chain issues, however, have prompted the trend to bring manufacturing back onto U.S. shores. Is on shoring right for your company? If so, how do you go about it? This blog series discusses both. In Part 1: 4 Reasons For Onshoring, we discuss the benefits. Part 2 discusses how to do it right.
Part 2: How Do You Prepare for Onshoring?
If you’ve decided onshoring is the right decision for your company, what do you do next? While your company will have specific requirements, there are some basics that every organization should consider up front, regardless of industry or timeline:
#1 Start Staffing Now
Because so much of manufacturing has been offshored for so many years, the U.S. workforce has shrunk, and technology has changed dramatically. You’ll need to look for workers with a different skillset, and that pool of work-ready candidates will probably be much smaller.
You need to get started sooner than later. Consider looking for basic skills, such as knowledge of technology or a compatible background or education, and then provide training for your specific requirements. Also consider hiring the retired or semi-retired workers—for the front line and for management; they have skills, maturity, and a great work ethic, and they can mentor younger, junior-level managers.
#2 Select The Right Location
You might assume manufacturing should be located at your headquarters, but don’t make that assumption. Look where your base of customers is geographically located to minimize the cost of distribution. Also consider what type of structure you need, depending on what you produce and how you sell. Finally, consider proximity to raw materials—outbound and inbound logistics. You might consider setting up multiple warehouse locations or bringing in a third party to assist with delivery. The bottom line: compare the cost of goods sold—overhead, labor, etc.—to make an educated decision about location(s).
#3 Don’t Compromise On Quality
One of the biggest issues with offshoring is quality. It’s important to put it front and center when you bring operations back on shore. Since you’re starting from the ground up, you can ensure quality is in every phase of the operation, including training.
#4 Make Appropriate Adjustments to Customer Service
Be sure to determine if your customer service practices will be impacted by a move, and if so, how. This is also a good opportunity to evaluate your practices. With your manufacturing operation in the U.S., you can address issues at the source and have a better handle on quality, which is a competitive advantage. Think about where customer service staff will reside and consider having them close to your manufacturing facility to expedite returns and exchanges.
#5 Get The Right ERP System
With all these components in place, you need the right technology in the form of an ERP system. If you’re using a different ERP system at the offshore operation, you will need to start thinking right now about how to transfer that data into your ERP system in the U.S. For example, Microsoft Dynamics NAV or Business Central easily transfers data from one country version to another.
Keep in mind that whatever you decide, you need to make sure you have a plan for now and in the future—a system that can take care of onshoring but that can also grow with you and handle technology needs such as the web and any of your company’s unique processes.
One Final Note
Want to learn more about bringing your manufacturing operations back to the U.S.? Download our eBook, Onshoring Your Manufacturing Operations: Is It Time…and Are You Ready?