Many companies are considering expanding U.S. sourcing or reshoring production back to the U.S. in an effort to be nearer to customers. Some of the benefits of sourcing locally include increased flexibility in adapting to variable demands, shorter lead times and time to market, eliminating higher shipping expenses, and minimizing supply-chain disruptions. Plus, when manufacturing moves next to design and design engineers work closely with manufacturers, together they can improve the design, eliminate waste, improve quality, increase productivity, and make the product more easily and efficiently.
How should companies go about this reshoring?
As companies consider new locations and production strategies, they must first decide what areas they want to invest in and where they want to rely on suppliers. In a recent article in MIT Sloan Management Review by Willy C. Shih, “What it Takes to Reshore Manufacturing Successfully,” a manager from was quoted as saying, “Pick where you want to invest in core competencies, and acknowledge where you want to have strategic suppliers—where you aren’t going to make the deep investment yourselves.”
Next, buyers need to find strategic U.S. suppliers with the right capabilities, capacity, and quality performance needed for the job. However, due to years of offshoring, the U.S. supplier network has incurred some structural damage and new U.S. supply chains must be rebuilt and managed.
As manufacturers are rethinking production locations and supply-chain options, rebuilding and mapping the American supplier network is becoming increasingly important. To help facilitate successful U.S. sourcing, companies—both buyers and suppliers—must bridge the gap between buyers and U.S. suppliers; forge strategic relationships; and collaborate to solve design and production issues
What do mean by “bridge the gap”?
Creating high performing, collaborative alliances between buyers and U.S. suppliers, that is, bridging the gap will ensure a strong and sustainable American supply chain is rebuilt. However, as cited by The Milstein Commission on New Manufacturing, Co-Chaired by Haley Barbour, Former Governor, Mississippi and Evan Bayh, Former Governor and U.S. Senator, Indiana, many small and medium companies do not have the know-how to locate the suppliers needed to move beyond the design stage. They simply do not have the resources to fully leverage the U.S. supply chain. In turn, potential U.S. suppliers lose out on opportunities.
What can those small and medium companies do to get the most from the supply chain?
One successful strategy is to partner with an e-sourcing company to streamline supplier discovery. An e-sourcing platform can save companies time so that they can concentrate on their core income-generating business responsibilities. E-sourcing can also streamline the sourcing process and locate the U.S.-based suppliers with the expertise and the machine assets needed for the job. Buyers can quickly receive quotes and easily compare and identify the best match. It also lets managers make better decisions in terms of costs and quality.
E-sourcing technology can be a fundamental component in connecting buyers with U.S. suppliers, as well as an efficient way to facilitate a level of collaboration to build and sustain solid relationships.
Do suppliers gain from partnering with an e-sourcing platform?Yes. They can get in front of live RFQ opportunities at the time when buyers need their custom services, then review engineering documentation and CAD files and respond to RFQs effectively and in a timely manner. In general, e-sourcing platforms are powerful business development tools that can promote suppliers’ capabilities and services and boost machine uptime by getting in front of a greater number of opportunities.
How do companies accomplish the second step, forging strategic partnerships?
The new model for building strategic partnerships between buyers and suppliers incorporates a cooperative relationship of “co-innovation” that includes information sharing and collaboration to solve design and production issues. This means buyers and suppliers should be collaborating and innovating together. Revitalizing the U.S. manufacturing base relies on efficient communications and coordination in buyer/supplier relationships.
What can OEMs and manufacturers do to set up strategic partnerships with suppliers?
Collaborate with your supplier network to maintain optimum productivity and profitability for your manufacturing operation. And be sure to communicate clear and specific details about the job to receive an accurate quote, because effective communication with suppliers will optimize efficiency, accuracy, and profitability. Companies also need to remain positive to an open exchange of communication, information, and suggestions to solve problems and create better processes.
Do suppliers have a role in establishing these strategic relationships?
Suppliers need to communicate with customers and potential customers to forge strong relationships and build trust. They should stay engaged with them to keep in front of potential problems. Suppliers must also provide the quality performance and good service that creates repeat customers who will, in turn, become advocates for your company and services.
Where do new technologies come in?
As global companies invest in technology for their own domestic supply chains, companies in the U.S. may want to consider putting new technologies, processes, and automation in place while taking advantage of the close proximity of design and manufacturing to promote innovation. Lean manufacturing, new technology, and collaboration between buyers and suppliers can eliminate unnecessary parts and processes, resulting in significant cost savings. Considering these methods early in the product development cycle and reevaluate designs from a manufacturing standpoint to get design decisions that reduce costs.