When it relates to manufacturing, operating in a cost-effective manner is vitally important. Cost savings can be realized through many aspects of a manufacturing operation – from the materials being used to the amount of energy being expended by the equipment. “Just-in-Time” (JIT) operations have been what manufacturers typically used to help save money since this method receives inventory only as it’s needed for production. This method typically helps reduce wasteful spending and allows manufacturers to optimize shipments, and for many years, offshoring manufacturing operations have been one of the best ways for manufacturers to save money with JIT operations.
In the months following the pandemic, many disruptions and slowdowns in the international supply chain have led manufacturers to consider keeping their operations domestic in order to save money for themselves and their customers. A “Just-in-Case” (JIC) method of operations has become the new focus for manufacturers who have begun onshoring, as it emphasizes stocking up on inventories ahead of time. With all the shortages and slowdowns due to the lockdowns, onshoring operations along with JIC helps prioritize minimizing the chances of goods running low in stock or falling behind in the production schedule.
Benefits of Onshoring Operations
The decision for manufacturers to onshore operations was accelerated by the COVID-19 pandemic. The supply chain has been severely disrupted due to the lockdowns, and manufacturers continue to be concerned about the risk of not getting their product or tooling produced in a timely manner. According to a survey done by BCI Global, roughly two-thirds of U.S. and European manufacturers say they will bring some Asian production home by 2025. This move is understandable, as the price of getting a container to the US is now costing more than the product that’s inside that container. Not only that, but manufacturers also run the risk of international governments potentially locking down again if COVID transmission is high, thus creating more disruption to the entire supply chain.
Keeping products on the shelves is what’s most important in this current climate, which is why JIC is becoming the focus for many manufacturers. Businesses that have sourced 100% overseas are beginning to realize that JIT is no longer viable, and manufacturers like Sussex IM have collaborated with customers to map out tooling transfers to get projects up and running in a seamless and efficient manner.
Onshoring has allowed businesses to bring many of their manufacturing processes back in-house, helping relieve the constant disruptions caused by the supply chain. Some of the benefits of onshoring operations include:
Risk aversion. There is too much uncertainty with offshoring from a timing, cost, quality, and availability standpoint. Based on the current environment, having manufacturing operations closer to home is a big benefit.
Less travel. It can be rather time-consuming and expensive to travel internationally to meet onsite, especially when lockdowns are continuing to happen all over the world. Border shutdowns and travel restrictions can create large kinks in the supply chain that could have been avoided with onshoring.
Faster lead times. Manufacturing processes can be completed more quickly if products or tooling are produced onshore, both due to logistics and supply chain disruptions.
Eliminating shipping costs. Overseas freight costs and tariffs can drive up prices for all manufacturers, not just those in the plastics industry. Being closer to manufacturing facilities reduces shipping and travel costs and increases overall efficiency.
Domestic products. Customers tend to prefer purchasing products that are manufactured domestically as opposed to overseas, and onshoring allows manufacturers the benefits of having their operations in-house as well as being able to market their parts as ‘Made in the USA’.
What about Nearshoring?
Rather than onshoring operations, some manufacturers may believe nearshoring operations in a neighboring country is a better option. For example, a US-based manufacturer may nearshore operations to Mexico or Canada. This strategy could potentially save money while also eliminating common overseas supply chain disruptions. However, nearshoring still aligns with considerable risk compared to onshoring.
Potential COVID lockdowns tend to vary by country, and often times regulations can change at a moment’s notice, causing unnecessary disruption in the supply chain. There are also staffing issues and potential border and customs issues to consider when nearshoring operations, even in places like Canada or Mexico, meaning onshoring presents far less risk than nearshoring.
Your Trusted Wisconsin-Based Manufacturer
Sussex IM is a well-known Midwestern manufacturer, and our injection molding capabilities and manufacturing practices are supported at our two Sussex, Wisconsin facilities. Our team is consistent in our standards for customer satisfaction and dependable part production – for over four decades, we have been known in the industry for being respectable and reliable manufacturing partners.
As it pertains to supply chain shortages, our customers know they can trust Sussex IM to guarantee they won’t run out of resin. We hold inventory in our advanced manufacturing facility and consistently purchase safety stock to ensure customers have affordable alternate resin material in case supply runs out. No matter how difficult the circumstances, Sussex IM is here to help safeguard our customers’ bottom line.
If you want to learn more about onshoring manufacturing operations, contact Sussex IM today.