What is Reshoring -circuitously

Via Evolving Excellence, I found a new-to-me site called Product Design & Development which I thought was pretty interesting. EE mentioned a recent post there, Re-Shoring – Bringing Manufacturing Back To American Suppliers which I liked. While I try to remain vigilant and wary of the echo chamber, the entry was a good briefing on a variety of larger enterprises which have repatriated their production to the U.S.. I can’t predict how the material will play to this (or any) audience. Either you agree outsourcing is undesirable and high-five your like minded kindred or you’ve decided the payoff is worth the risks. I imply no judgments either way.

Other entries on the site were interesting (I did say this was circuitous) such as the one about Apple’s efforts to police their overseas contractors. Again, one could high-five Apple, great guys they are or you can take it the other way, that great guys would have been more vigilant to prevent employee suicide. There’s a link in the post to Apple’s supplier responsibility progress report for 2010 (pdf), a white paper prettied up that explains their overseas manufacturing auditing process. This document is very good; it’s clean, readable and provides a lot of plain language guidance anyone could use to set inspection standards for any contractor they use, be they foreign or domestic. I hope you read it. That the paper was disseminated widely to the public is shrewd strategy if the transparency bolsters Apple’s credibility with consumers. And I think it will, admittedly perhaps self-servingly because I know I don’t want to feel guilty over having purchased my iPhone. The point is, look over the guide, the audit description starts on page 13 and consider using some of those guidelines yourself. Likewise, make the results of your process transparent to consumers via download on your websites.

Another link on the PD&D website led me to a conference sponsored by the NTMA (National Tooling & Machining Assoc). The Irvine CA event is a contract manufacturing purchasing fair called Re-Shoring: Bringing Work Back to the U.S.A.. I really really would like to attend this event but it’s scheduled May 12, 2010 which is too close to the SPESA show in Atlanta on the 18th (be there or be square). I really regret not going because I’ve toyed with the idea of producing a metal machined product. I didn’t get beyond having a mechanical engineer evaluate it because I figured I’d have to go off-shore just to break even and I just don’t have the time or wherewithal to undertake something like that when it’s something that will never sell in large quantities. That and having my scissors cloned. Who knows, maybe I can find a way to go after all. I think it would be very educational to see how contract manufacturers in other industries interact and facilitate contract work with their manufacturer customers.

I close with this observance, a bit off topic.
One reason smaller firms have become less profitable or rather, fighting for margins as they are is because they’ve adopted some practices used by larger firms that act to their detriment. As I mentioned in comments in this entry, I prefer businesses by size depending on the context.

I like smaller businesses because they’re more hands on and they traditionally spent more locally and were comparatively more profitable (employee head count divided by sales) than large ones but their internal operations can be nigh on arbitrary. I like large firms because their practices are more professional; we share the same points of reference making them easier to work with. The downside is less profit per employee, likely owing (in part) to the escalation of transaction costs typical of far flung enterprises employing outsourcing. In some respects, start ups have adopted the most obvious and riskier practices of large enterprises like outsourcing, incurring the same transaction costs without the trade off of equal access to capital larger firms enjoy (and tying up cash flow for required pre-payment through the long delivery cycle) but haven’t adopted the better standardized internal practices. Whatever, this is an observation not a lecture but if you’re so inclined, you might want to read Why you should start your own sewing factory. Use what you can and leave the rest.

Have a great day. I’m going thrift store shopping! Hopefully I’ll find cool stuff to tell you about later.

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2 comments

  1. When working with some LA based manufacturers last year, I was really surprised how much of the apparel industry is still in the US. Some of those manufacturers were very competitive, because they had differentiated themselves with a very wide variety of colors ( garment dyed ) and short order and shipping cycles, possible because they manufactured in the US.

    These companies tended to have no seasons, and one has been selling some styles continuously for 15 years, so the case probably can’t be generalized, but it did demonstrate how US manufacturing can be a significant competitive advantage.

    eric.

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