A global supply chain is attractive to many manufacturers. Years of lower costs, lower wages, and profitable final product price points lured many American manufacturers into what consulting firm A.T. Kearney dubbed “offshoring inertia.”1 Manufacturing and supply chain decisions were not necessarily prioritized, and offshore production continued.
Then, the turmoil of 2020 took hold. The escalation of the pandemic and global trade tensions exposed inherent risk by disrupting the once-comfortable global manufacturing and supply chain dynamic. Offshoring inertia quickly gave way to strategic reshoring initiatives for at least 69% of American manufacturing and industrial companies.2 Nearly 60% of industrial leaders surveyed by Gartner indicated expedited plans to maximize their supply chain resiliency within three years.2 About one-third of those same respondents noted new emphasis on moving business out of China and other countries.3
The escalation of political, trade, and pandemic-related tensions have called manufacturers and their suppliers into question. Some supply chains are snapping under the strain, and OEMs are left to find answers for — and rectify — costly failures.
Nearly half of respondents to a recent Thomas Industrial poll placed “Fabricated Materials (machined, stamped, extruded, or molded material)” at the top of the list of things needed for supply chain stabilization and consistent production.1 With that comes close scrutiny of custom injection molding companies when OEMs are streamlining suppliers.
International trade tensions and pandemic-related developments have brought heightened awareness to reshoring. US-China decoupling has American manufacturers reviewing all of their overseas relationships, and 69% of respondents to a recent Thomas Industrial survey indicated they “are likely to bring manufacturing production and sourcing back to North America.”1
Given the unstable political and public health environments, it’s hardly a surprise that the majority of American companies in the manufacturing and industrial sectors are considering decoupling. In fact, about one-third of company leadership teams have already moved manufacturing out of China, or have action plans in place to do so within the next two to three years.1
With a stunning 75% of automotive manufacturers reporting business interruption caused by the COVID-19 shutdown of non-essential businesses, many are taking a hard look at the impact of supply chain globalization1. More specifically, automotive OEMs are either proactively reshoring or planning to reshore to protect their supply chains — and businesses — from the political and economic fallout created by the pandemic.
The relationship an OEM maintains with its injection molder is integral to successful production of complex plastic parts. Often the partnership remains a value-add across projects and time.
But, there are instances when alignment between OEM expectations and molder capabilities erodes either suddenly or incrementally. Regardless, the outcome is the same: it’s time for the OEM to shuffle suppliers and find a new injection molder.
Central to a new product development program (NPD) is the budget, and exploring economic efficiencies often leads to a debate between offshoring and reshoring.
In most instances, overseas costs are particularly attractive compared to domestic production of custom injection-molded components for consumer applications.
However, in light of the coronavirus (COVID-19), the world is functioning within a new normal. Bottom line decisions are no longer black-and-white as the pandemic complicates — and often upends — supply chains, adding project time and cost. Quickly, the offshore injection molding "bargain" becomes a candidate for reshoring.
On-time delivery (OTD). Suppliers are defined by it. Industrial buyers demand it. A recent study about supplier sourcing confirms it, reporting that "delivery performance" is the most important of six factors buyers consider when compiling supplier shortlists.
The focus on supplier OTD takes on added significance in light of the massive supply disruptions caused by the coronavirus (COVID-19) pandemic. How well or how poorly a supplier is navigating the crisis and meeting OTD expectations provides a glimpse into their grasp on materials handling and production processes.
Outsourcing has long been a practical solution for manufacturers looking to keep budgets in check. Low-cost countries generally provide attractive price points for labor and products, especially when compared against those charged in North America. The lower the cost, the higher the competitive advantage.
The past several weeks have seen a whirlwind of collective emotion. The impact of COVID-19 is challenging all of us to reassess our priorities, appreciate things we tend to otherwise take for granted, and do our parts to protect each other by staying safer at home.