Sunday, January 10, 2016
Reshoring Lesson #1 - Your decision needs to be future-proof
Manufacturers originally decided to move their operations overseas to take advantage of low labour costs. However, the manufacturers who relocated their operations to China 10 or 15 years ago have learned that the cost of offshoring is almost always more than what they had calculated. China might have been the country with the lowest overall manufacturing costs 15 years ago, but tomorrow it is more likely to be Indonesia, India or Mexico. A country’s relative competitiveness is determined by a number of fluctuating factors such as wage growth, productivity, energy costs and currency fluctuations. So how can you decide where to offshore production and still make sure you will have made the best decision a decade later?
While manufacturers may not have control over macroeconomic factors, a number of studies have shown that the leading manufacturers consistently invest in technology. “Technology” can be a very broad and confusing term. Should manufacturers invest in robots? 3D printing? Infrared technology? ERP? There is no one-size-fits-all answer, but ERP will continue to play a key role in the manufacturing industry because it can bring all these technologies together, and it provides unprecedented insights into how to improve operational effectiveness.
What other lessons can you learn from Reshoring?