Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group, says that the Chips Act “has spurred on certainly quite a bit of investment” in the US electric car sector. And Mexico is also booming through ‘friend shoring’.

###

Read the full article at the BBC website. 

The post BBC: Why firms are bringing their manufacturing back home appeared first on LMA-Consulting Group, a supply chain consulting firm.

Status of the Medical / Healthcare Supply Chain

The supply chain has calmed down since the height of the pandemic; however, smart manufacturers are thinking ahead to changing conditions. Geopolitical risks are at an all-time high. The Russia-Ukraine war rages on and Israel and Hamas are at war which has spilled over to the Iran-backed Houthis rebels attacking container ships in the Suez Canal, disrupting a major shipping lane.

Additionally, China continues to threaten Taiwan which produces 90% of the advanced computer chips for the world and an important component in medical devices. China is also being very aggressive in the region which could impact shipping lanes through the South China Seas, manufacturing in China and manufacturing in countries in the region. Since China dominates the medical device supply chain, this is concerning. Thus, proactive manufacturers are moving towards regional manufacturing. This trend started following the pandemic (refer to our quote in a MPO Medical Products Outsourcing article) and has been picking up steam.

Reshoring & Expanding Manufacturing Capabilities

According to Xometry’s Medical Industry Survey, medical device manufacturers are rapidly reshoring operations to strengthen their domestic supply chains. In fact, 67% of medical device manufacturers are in the process of reshoring operations within the next 12 months. There is a focused effort in rethinking supply chain strategies.

Although many companies are reshoring, executives remain concerned about the cost impact of expanding production in the USA. The good news is that labor costs have decreased as a percentage of total cost dramatically since the offshoring craze while other costs have increased, making reshoring more attractive. For example, transportation costs were heightened during the pandemic and have been impacted by the Panama Canal drought, the diversions of the Suez Canal, and other supply chain disruptions. The cost of capital has increased significantly with the increase in interest rates which has made the cost of carrying inventory much higher. And there are many other costs to consider in the total cost to produce. In fact, the total cost of product can be equivalent or even less in the USA in some non-commodity situations.

Many advancements have been made in manufacturing and technology. Companies are automating and digitizing their manufacturing and supply chain. For example, they are using 3D printing/ additive manufacturing, robotics, artificial intelligence with IoT, and other advanced technologies to improve efficiencies and enhance visibility. As manufacturers expand their manufacturing footprint, source new regional suppliers and reshore production, these advanced technologies maximize operational performance and minimize cost while maintaining and improving customer service levels with lower inventory levels. Thus, margin concerns are mitigated depending on the upgrades and improvements to the manufacturing process.

In the medical device industry, companies are starting to expand regional manufacturing in the USA. For example, Ascential Medical & Life Sciences is reshoring to Minnesota. Their new state-of-the-art facility has highly innovative automation solutions, making reshoring financially viable. Certainly, they are not alone. Companies are expanding operations in the USA.

Manufacturers are also nearshoring to the region. Mexico has expertise in medical devices and the ability to scale. Since customer requirements are significant in North America, the ability to scale in the US and Mexico is a relevant factor. The availability of advanced manufacturing and technical skills is also an important factor. Medical grade material supply can be sourced nearby, and the USA is ramping up computer chip manufacturing capabilities. For high labor component products, Mexico provides an excellent option because their labor rates are lower than China, and they benefit from the USMCA agreement between the two countries.

Although the USA and Mexico are great options with scale, there are additional medical device manufacturing hubs in other nearby countries. For example, Costa Rica has advanced skills, computer chip manufacturing, and therefore a thriving medical device manufacturing concentration. The Dominican Republic has medical device manufacturing, and Puerto Rico is known for pharmaceutical manufacturing.

Manufacturing Resurgence

There is no doubt that the successful companies will mitigate risk and manufacture regionally. Thus, the USA, Mexico and business friendly countries will experience a resurgence in manufacturing in the next decade. It will require investments in manufacturing, tooling, and other resources although there are opportunities to keep costs intact or even reduce total product cost.

The most successful companies will upgrade their processes, ERP systems, utilize advanced technologies, maximize customer and product profitability and proactively manage these opportunities with a SIOP (Sales Inventory Operations Planning) process. Assess your supply chain to learn how you stack up. Take our complimentary supply chain assessment. Upgrade, innovative, get ahead of the competition, and thrive.

If you are interested in reading more on this topic:
Why Manufacturing Matters and Will Thrive in the Next Decade

The post Regional Manufacturing in the Medical Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.

Supply chain optimization must remain a priority as disruptions continue. For example, although the Panama Canal started experiencing issues in the summer (refer to our article for details), it has been worsening lately. 40% of the goods movement from Northeast Asia to the U.S. East Coast go through the Panama Canal, and so the Panama Canal issues are driving shortages, late deliveries, and re-routing of goods.

Panama Canal Issues Worsen

Drought conditions are creating a new round of disruptions:

• Reduced container ships: by > 50% (from 40 to 32 earlier in 2023 to 25 Nov, 20 Jan & 18 Feb). 
• Restrictions on ship draft: to a maximum ship draft to 44 feet (vs. 50 feet) – requiring larger ships to sail light or unload, rail across & reload 
• Capacity restrictions: Neopanamax locks (handling larger ships) restricting to capacity by 50% (from 10 to 5 per day)
• Gas container ship impacts: LNG and VLGCs (very large gas carrier) will experience the greatest impact since deprioritized 

Inflation impacts: Creating inflationary pressures, shortages and delays. Some ships paying up to $4M to go to the head of the line

The China Risk

In addition to the disruptions to the Panama Canal, there are other risks associated with the Panama Canal. Hutchison controls the terminals at both ends of the Panama Canal. Thus, if China wants to “control” the flow through the Panama Canal, they can do so via Hutchison. It is an important risk to consider.

Responses to the Panama Canal Issues

Proactive executives are not waiting to see how this turns out. They are pivoting. Several of the actions include the following:

• Alternate routes: Depending on the start and end point, companies are pursuing different routes. These include the Suez Canal and sailing around the southern tip of Africa or South America.  
• Alternate modes of transportation: Depending on urgency, and start/ end points, companies are using air freight, rail etc.
• Alternate routes & modes of transportation: Companies are also going to an alternate U.S. port and sending product via rail or truck to its destination.
• Moving and/or reallocating manufacturing: Companies are certainly pursuing reshoring, nearshoring, and expanding manufacturing to minimize risks and shorten lead times. In addition, if they have multiple facilities and/or contract manufacturers, they are proactively moving manufacturing to support customer needs and mitigate risks.
• Forward position inventory: Depending on the manufacturing and distribution network, clients are also positioning inventory close to customers so that they can absorb additional disruptions without impacting customers.
• Change distribution network: Clients are also moving and expanding their distribution networks to better support customers. They are doing this in creative ways, sometimes partnering with customers, suppliers, and competitors.

The key is to proactively address these issues to mitigate the impacts to the customer and cost, and longer term, to revise your manufacturing and supply chain footprint and network to best support profitable growth and mitigate risk.

If you are interested in reading more on this topic:
Supply Chains are on the Move

The post Supply Chain Optimization Remains a Priority as the Panama Canal Worsens appeared first on LMA-Consulting Group, a supply chain consulting firm.

The White House has launched a cabinet-level supply chain council as the criticality of the topic rises to the top. Although they emphasized the minimization of supply chain disruptions as it relates to inflation, our perspective is that the supply chain is much bigger than that. From national security to securing supply chains of the future, there is tremendous work that industry must take on at a dramatically accelerated pace for companies that want to thrive 5 to 10 years from now.

Why Supply chain Resilience Matters

China is the largest manufacturer of the world and there are many risks rising to the top. For example, China is quietly working on several fronts:

• Supporting Russia and Iran behind-the-scenes (buying up oil etc.)
• Threatening Taiwan (which produces 90% of the advanced computer chips in the world)
• Threatening goods movement in the South China Seas (risking shipments to/from Asia)
• Buying up and/or taking control of farmland, critical minerals, ports/ terminals (including control of the Panama Canal), and other infrastructure around the world
• While the US has decreased carbon emissions by 20% since the peak, China is expected to be at an all-time high in 2023. They permitted 2 coal plants per week in 2022.

There are other risks throughout the world. Look no further than the Russia-Ukraine war, the Israel-Hamas war, etc. Each of these events impact the supply chain. In addition, there are the many disruptions carrying on since the pandemic caused by a variety of factors including lack of resources (labor, materials), weather, strikes, etc. The baby boomers are retiring at a quick pace, creating a shortage of resources we haven’t seen in our memories.

Thus, supply chain resilience has become of paramount importance.

Supply Chain Resilience Path Forward

Unfortunately, there is no 5-step plan to check off to create a resilient supply chain. The bottom line is that it requires confronting reality, uncommon common sense, execution of process disciplines, innovation, and a willingness to take smart risks and invest wisely.

Our proactive clients are jumping on creating a resilient supply chain. In no special order, they are following several of the following strategies:

• Rapid assessment: It helps to know where you are starting (strengths, weaknesses, risks, priorities) so that you can focus efforts rapidly. Learn more about LMA’s complimentary supply chain assessment. 
• Reshoring: Getting manufacturing under better control
• Nearshoring/ Friend shoring: Bringing manufacturing closer to consumers/ customers to minimize disruptions and lengthy transit times.
• Backup sources of supply: Pursuing multiple backup sources of supply to cover for unexpected issues.
• Securing funding to support resiliency and growth: Investments are required (technology, people, infrastructure) to create supply chain resiliency.
• Implementing technology to support resiliency: Smart executives are upgrading ERP and related technologies (IoT, AI, CRM, customer/supplier portals, business intelligence, etc.) to increase visibility, automate mundane tasks, and upgrade the customer experience.
• Cross-training internal & external: In addition to cross-training resources to backfill key roles, smart executives are supplementing resources with consultants, collaborating with supply chain partners, and finding creative solutions to ensure customer service and profitable growth during volatile times.
• Moving from vendors to partners: Vendors will not be there when you need them. Vendors implies price. Upgrading to suppliers is a step in the right direction; however, during the risk laden times, partners are needed.
• SIOP (Sales Inventory Operations Planning): Upgrade your demand and supply planning to get in front of what’s needed to create a resilient supply chain with a SIOP process. Learn about SIOP, also known as S&OP, and read our recent article on moving manufacturing forward instead of backwards with SIOP.

The Bottom Line

There are many more strategies you should pursue to ensure supply chain resiliency. Start with a rapid assessment while jumping on at least one strategy that supports your company objectives. Don’t just add a program and assign your already limited resources to another priority. Instead, do the hard work to determine what will make a difference and focus your resources.

If you are interested in reading more on this topic:
A Resilient Supply Chain Built for Competitive Advantage

The post Supply Chain Resilience Has Risen to the Top with the White House Council appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted in an article on the American Express website discussing why local sourcing can help benefit your business in a big way!

###

As risks multiply on the world stage and with increasing economic and logistical disruptions, a local supply chain will prove critical for most businesses, according to Lisa Anderson, an expert in manufacturing and supply chain management and president of LMA Consulting Group, Inc. 

Local supply chain sourcing, she says, improves efficiency and quality control by enabling quicker responses to customer needs, optimizing production processes, reducing waste, and increasing operational efficiencies between manufacturers and distributors. Below are more advantages, with insights from owners of two growing businesses, and ways that sourcing local can help benefit your business in a big way. 

1. It Gives You Greater Control Over Your Materials

Through simple local sourcing and networking, Kim Talebi sought out local farms and foragers for ingredients. The Minneapolis-based CEO and owner of Kaskaid Hospitality – which owns and operates The Butcher’s Tale and other restaurants and catering businesses across the U.S. – loves having access to farm-fresh tomatoes and other produce all year long through working with a local greenhouse. “This makes a huge difference versus using mass-produced, under-ripe tomatoes shipped from South America in the wintertime,” she says. 

2. It Reduces Minimum Buys

When you have a local supplier, you can reduce minimum buys because you eliminate the need to fill a container ship, train, or truck. Shipping can be less expensive when your product is being delivered from a local source, so you can offer better prices to customers due to minimized transportation costs and optimized production runs.

3. It Allows for More Flexibility 

“For my handbags and jewelry, I work with suppliers and manufacturers based in New York City, which is only a two-hour drive from my studio in upstate New York. I can travel to the city as needed to meet with my factory contacts in person, as well as source materials,” says Emily Li Mandri, founder-designer of MLE. The company’s statement accessories have been sold by high-end U.S. retailers and are carried in more than 200 stores worldwide. “I can make the decision to go the same day if I need to; it’s really nice to have that kind of flexibility.”  

4. It Reduces the Pressure to Offer Discounts 

Since local suppliers can respond to changing conditions more quickly, less inventory may be needed in the end-to-end supply chain. The inventory required to cover for volatility will likely be less if the supplier and manufacturer can work together on win-win solutions to increase agility and flexibility, according to Anderson. 

5. It Means a Win-Win for Supplier and Customer 

“Local suppliers provide a distinct advantage in getting products to market faster. Product development designs and trials can be done collaboratively for rapid prototyping, testing, and trialing. Additionally, the feedback loop can be direct, speeding up the entire process,” says Anderson. “As problems arise, the appropriate resources can be brought together rapidly to collaborate and overcome bottlenecks. Thus, the new product lifecycle can be dramatically shortened, incorporating additional customer feedback and generating greater growth and a smoother product launch.”

…

To read more, click here.

Originally published on the American Express website, September 12, 2023

The post Local Sourcing Has Big Benefits for Business appeared first on LMA-Consulting Group, a supply chain consulting firm.

The post The Global Supply Chain Life After Globalization appeared first on LMA-Consulting Group, a supply chain consulting firm.

Israel was attacked by Hamas, and the world has another war in another region of the world. Since the global supply chain is interconnected, in addition to the devastation in the region, supply chain impacts will emerge. As I discussed with the Los Angeles Business Journal earlier this week, supply chain disruptions will impact every partner connected to the region in the end-to-end supply chain and/or those that must travel through the region.

Labor Shortages

Israel is already affected as companies are saying that employees are part of a mass call up of army reservists. Labor shortages were already causing challenges throughout the world; as key high-skilled labor must participate in the war, businesses will be impacted. In addition to labor shortages, Israel is a hub for advanced computer chips. In fact, it is one of the key regions aside from Taiwan for advanced chips. Intel produces chips for AI and self-driving cars. Nvidia produces chips for AI, and Apple designs some of its silicon in Israel.

Hub for Advanced Computer Chips

In addition to labor shortages, Israel is a hub for advanced computer chips. In fact, it is one of the key regions aside from Taiwan for advanced chips. Intel produces chips for artificial intelligence /AI and self-driving cars. Nvidia produces chips for AI, and Apple designs some of its silicon in Israel.

Import/ Export Impacts

Israel’s imports and exports are impacted. For example, Israel has significant trade with India, increasing from $200 million in 1992 to $101 billion in 2003. Israel exports fertilizer, electronic components, petroleum, and agro-chemicals. Other import/ export items include chemicals, plastics, metals, medical and industrial equipment and more.

Regional Impacts

Israel is in a critical region of the world known for producing oil. Since energy is vital to fuel manufacturing and supply chain, it is important in fueling the world. If the war in Israel expands beyond the country’s borders, it can pose a risk to two key shipping choke points: the Suez Canal, a key waterway for all types of commercial container ships, and the Strait of Hormuz, which is pivotal to oil and gas shipping. 

Impacts on the Supply Chain

In thinking about Israel’s impact on the region and the world, it is clear that many supply chain disruptions are likely to emerge. If your supply chain is dependent on a trading partner of Israel such as India, you could be affected. If you are dependent on advanced computer chips, your supply chain will be impacted, even if you get your chips from Taiwan.

Anytime there is a disruption in one node of the supply chain, it can expand to all nodes connected to that node. Almost every manufacturer and logistics organization is dependent on oil and natural gas and will be indirectly impacted with higher prices at a minimum. Equally concerning would be an expansion of the war that impacts the Suez Canal. We have evolved into a globally-connected supply chain, and successful executives will rapidly determine their risks and mitigate them.

Strategies for Success

Every forward-thinking organization is getting on top of their end-to-end supply chain. You need something like a supply chain control tower to keep track of potential risks and impacts with changing conditions so that you can successfully navigate changing circumstances. It is no longer for the large global organizations. If you want to succeed, you will dedicate resources to monitoring your supply chain.

Uncommon common sense will prove essential in the years to come. Sourcing backup materials and logistics suppliers is simply required. Knowing your partners will be essential. Since your viability might be dependent on your suppliers, you should determine if they are trustworthy, financially viable, and innovative. Thus, although having access to multiple suppliers in various regions is important, you will also have to consolidate efforts to just those that meet your requirements as a partner, not just a transactional vendor.

Smart executives are also pursuing reshoring, nearshoring and friendly shoring programs. To learn more about what the most successful companies are doing, read our special report, “The Road Ahead: Business, Supply Chain & the World Order“. Unless you can afford to risk your customers, you must take control of your supply chain. Don’t forget to evaluate geopolitical risks, energy, natural resources, and supplier networks as you pursue these strategies.

Following a SIOP (Sales Inventory Operations Planning) process that is forward-thinking and predictive to develop demand plans and sales forecasts is becoming even more vital. With heightened supply chain and geopolitical risk, the lack of resources and labor shortages, and escalating costs, only those that look forward and plan for how they will fulfill their orders profitably and with high service levels will succeed. They will be evaluating customer and product profitability, manufacturing capacities and capabilities, supply chain networks, pre-positioning of inventory and capacity, and the required resiliency to best support customer needs.

The Bottom Line

The supply chain is interconnected globally. A ripple in China can impact Europe. A weather event in Japan can influence the U.S., and a war in the Middle East will impact every region of the world. Assess your supply chain, its interdependencies, and your alternative and backup options. Put it together into a strategy and path forward to ensure you can meet your customer needs and deliver bottom line results.

If you are interested in reading more on this topic:
Supply Chains are on the Move

The post Israel-Hamas War & Impacts on the Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.

Global supply chains are on the move. Executives have been hit with the harsh reality that the risk (supply chain, geopolitical, cyber, IP, etc.) is far higher than they realized when they outsourced with an eye to cost. In addition to that 80 pound gorilla, they also have suffered with delays, disruptions, and uncertainty in serving customers due to lengthy distances and logistical risk. Thus, supply chains are on the move. Strategies need to be rethought, the end-to-end supply chain assessed, and future customer needs evaluated to get in front of this changing landscape. SIOP (Sales Inventory Operations Planning) is a key process and toolset for successfully navigating this transition with profitable growth fueling the process.

Risks Abound in the Global Supply Chain

Risks abound in the global supply chain. From Russia-Ukraine to China’s extreme risk including threats to Taiwan to the increasing cyber risk, executives are struggling to navigate the global supply chain. A few critical points that “tell the story” of risk include:

• Russia-Ukraine war: The war has disrupted the critical commodities of oil and natural gas. Europe put sanctions on Russia which left them in a bad situation in getting enough energy to power their current lifestyle as well as critical manufacturing, logistics and infrastructure needs. Thus, Europe has been scrambling to address backup sources of supply. In the interim, Russia sold oil and natural gas to China and India. The end result is price escalation in addition to “supply on the move”. Oil and natural gas is used in countless products from medical devices to glasses to phones, thus impacting the global supply chain.
• The China risk factor: China is simply a mountain of risk. China is the number one manufacturer in the world and accounts for almost 30% of the world’s output. Thus, from internal issues (severe water and energy shortages with “solutions” of permitting two coal plants a week) to threatening Taiwan (putting 90% of the world’s advanced computer chips and 60% of the world’s standard computer chips at risk) to monopolizing rare earths (produces 60% and processes 85% of the world’s rare earths) to buying up critical infrastructure around the world (such as controlling both ends of the Panama Canal) and controlling the South China Seas, China wants to control the world’s supply chains.
• Talent & Technology: Resources are limited around the world. For example, according to EY and an iMocha report, 81% of organizations are experiencing a shortage in skilled tech workers. Similarly, the risk of cyber attacks and supply chain security issues increase with each passing day. For example, according to Deloitte’s report 2023 Global Future of Cyber Survey 2023, 91% of organizations report experiencing one or more cyber incidents or breaches.

And now Israel is at war. Volatility, uncertainty, complexity and ambiguity (VUCA) is at an all-time high in recent history. The bottom line is that risks have reached a level that is unacceptable to many executives.

SIOP to Devise a New Path Forward

SIOP (Sales Inventory Operations Planning), also known as S&OP is a process that will help you navigate changing business conditions (such as these extreme risks). SIOP starts with a view into your future customer demand (sales forecast, customer orders, quotes, CRM) and translates that into manufacturing and supply chain requirements. The process will highlight capacity constraints (production, storage, resource), upcoming bottlenecks, forecasts for investment (equipment, inventory, resources), make vs buy decisions, and customer/ product profitability opportunities.

For example, when consulting with an industrial manufacturer that was concerned about risks in the end-to-end supply chain, and so used the SIOP process to visualize what should be done. Based on their demand plan, they were able to see impacts to their supply plans and where risks were in their current manufacturing and supply chain. Thus, they assessed and took action to transition to backup sources of supply, expand their supply base into India, pre-purchase critical commodities to give them time to assess their future needs, and they expanded regional manufacturing by sourcing offload suppliers. By taking these actions, they were able to secure supply to meet their aggressive growth plans.

Assessing Strategies

In our book, “SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth“, we discuss how SIOP will fuel transformative strategies for growth while mitigating risk.

• Supply chain footprint: SIOP looks forward to future customer requirements and determines how to reallocate manufacturing and change the supply chain footprint (reshoring, nearshoring, regional manufacturing, additive manufacturing) to support key customers and grow the business while mitigating risk in how product is manufactured, distributed, transported and delivered in the order fulfillment process. Vast changes are occurring. For example, Apple is moving from China to India, Dell is moving from China to Vietnam, HP is moving from China to Mexico, and Intel is building a ‘mega’ factory in Germany and expanding capacity in the U.S. with its first new manufacturing facility in 40 years.
• Supply chains on the move: As the supply chain footprint evolves, the global logistics landscape must change to support it. Thus, as I said at the IMUI international conference, shipping routes will change and evolve with changing business conditions and risks. For example, in addition to keeping up with manufacturing changes, as China becomes risk laden and the South China Seas becomes uncertain at best, companies will continue to move manufacturing and/or change shipping routes. As delays consume shipping routes such as the Panama Canal, companies will find alternatives, and as strike risks impact supply chains such as the West Coast ports, shipping routes move (and the East Coast gains in this example).
• Examining links: SIOP opens the door to examine every link in the chain. From enabling margin analysis by product groupings, customers, markets and regions to examining the customer experience, the SIOP provides for holistic as well as departmental strategies.
• Margin vs risk: SIOP also provides the data and process for evaluating cost reduction opportunities, pricing strategies, sales channel and marketing options, operations and supply chain alternatives, and inventory and capacity fulfillment options while assessing customer value-add business risk.
• Talent & Technology roadmap: Last but not least, SIOP translates demand and supply plans into talent and technology requirements. More importantly, the resource requirements can will be impacted by the technology roadmap, and so the best SIOP strategies proactively address talent and technology to optimize, digitize and thrive. There are simply not enough resources at any company. Only those that automate, utilize technology and innovate will survive, let along thrive.

As risks abound, the best in class will utilize the proven process of SIOP to proactively navigate changing conditions in a manner that is not only supportive of profitable growth but is also focused on critical risks and long-term success.

Innovation: A Forward Take on Risk

Beyond the uncommon common sense strategies to ensure predictable revenue and EBITDA growth, executives must develop a culture of innovation. The world has become not only complex and convoluted, but also a maze of geopolitical risk dependent on advanced technologies. These advanced technologies escalate risk further as they are dependent on commodities in risk abundant regions of the world and carry the threat of cyber attacks. Thus, the smart are innovating. Only forward-thinking innovators willing to do what most executives will not do (such as invest when everyone else panics) while remaining calm, resilient and strong will thrive for decades to come.

Did you like this article?  Continue reading on this topic:
SIOP/ S&OP Playbook: Creating Predictability & EBITDA Growth

The post Supply Chains are on the Move appeared first on LMA-Consulting Group, a supply chain consulting firm.

Manufacturing appears to be turning the corner. According to the ISM, the Purchasing Managers Index (PMI) recorded a contraction but at the slowest pace of the recent cycle. In fact, this is the third straight month of improvement. The expansion of the PMI is indicating a recovery on the horizon for manufacturing.

S&P Global also surveys the economy, and their statistic shows that manufacturing is near stabilization. Their Purchasing Managers’ Index came in at 49.8 with production increasing at a marginal pace. Thus, the most respected surveys align and are trending positive for manufacturing.

Manufacturing Expansion Beyond the Statistics

Beyond the economy’s signals, manufacturing has the potential to surge. Whether reading surveys, talking with clients or collaborating with colleagues, it is clear that smart executives are expanding manufacturing footprints, reshoring from Asia, and finding regional partners to increase manufacturing. According to a poll conducted by Forbes, Xometry, and John Zogby Strategies, 82% of CEOs have already implemented — or are actively pursuing — reshoring strategies.

These expansion and reshoring activities will accelerate the manufacturing resurgence. The bottom line is that manufacturers are realizing that the risks associated with China, manufacturing long distances from key customers, and other geopolitical conflicts and wars such as the Russia-Ukraine war are simply too high. Forward-thinking executives are taking control of their ability to serve customers. To read more on this topic, read our article “Take Control of Manufacturing to Wrestle Volatility to the Ground.”

Where Should Manufacturers Focus?

There will be more opportunities than ever before as prepared, innovative, and resilient manufacturers will have the opportunity to take market share as they can service customers with ever increasing expectations in a scalable, profitable manner. Unfortunately, the rest that rest on their laurels, reacting as events unfold will not be able to keep up with key customer needs and gain traction quick enough to succeed in today’s volatile environment where customers expect customized products, personalized service, with rapid execution and innovative solutions.

Thus, during manufacturing month, we should be thinking five steps ahead of the competition. Don’t just bring manufacturing back; instead, think about expanding manufacturing in a new way. Automate where it makes sense (starting with repetitive tasks), digitize so that there is supply chain visibility and resiliency, utilize 3D printing and additive manufacturing to slash product development lead times and produce custom products on demand, analyze what if scenarios with digital twins, leap forward with AI and predictive analytics, and ensure your foundational processes, ERP system and related technologies are on solid footing.

Become passionate about talent and leadership. Our most successful clients retain top talent. There are no exceptions. Without your #1 asset, there will be no business. With the rate of retirement and the future of the workforce, there is a large gap to sustain business, let alone thrive in the next decade. Fundamental topics are arising at clients at a quick pace. Inventory accuracy, order fulfillment, and other bedrock topics can be much more challenging than they appear.

Only those who invest in proactive processes such as SIOP (Sales Inventory Operations Planning), dedicate the time to training, education, and development, and prioritize proactive organizational development and supply chain partner relationship building efforts will succeed. Yet this is still not enough. Innovation and resilience will be required to succeed during these turbulent times.

The Bottom Line

A manufacturing resurgence is underway. The only question is whether you will jump in and take control of your destiny or observe from the sidelines.

If you are interested in reading more on this topic:
Taking Control: Reshoring, Nearshoring, Friendly Shoring & Manufacturing Expansion

The post A Manufacturing Resurgence Is On Its Way appeared first on LMA-Consulting Group, a supply chain consulting firm.

The post The Global Supply Chain Life After Globalization – Pac Rim Perspectives appeared first on LMA-Consulting Group, a supply chain consulting firm.