Rebuilding and Reshoring: 7 Actions Technology Suppliers and Distributors Can Take to Help Their Customers
Category: Supply Chain • Jan 29, 2021
Harry Moser - Founder and President, Reshoring Initiative
Technology suppliers and distributors can sell more by helping customers reshore. My rallying cry for you is: Do what you do best and identify products that can make U.S. manufacturers more competitive. Help original equipment manufacturers (OEMs) and job shops invest more in your technology and services that will increase productivity and make them competitive enough to reshore. Access a huge new market since U.S. goods imports are about 30% greater than U.S. production. Take advantage of the current pivot to shorter, localized supply chains for resiliency and agility in the wake of the supply shocks caused by the COVID-19 pandemic.
Following are details of the actions:
1. Identify Business Opportunities
Ask OEMs what they are sourcing offshore and would strategically prefer to source here. Components that have many of the following characteristics are viable choices:
- Essential to the company
- Frequently changed designs
- Variability in demand
- Intellectual property risk
- Tight tolerances
Ask job shops what components they could get orders for if they were moderately more competitive against imports. You are more likely to get customers to agree and government to support reshoring essential products for the defense, medical, and high-tech industries.
Identify or develop technology to meet those opportunities. One of the biggest opportunities is to collaborate with a team, e.g. machine tool, cutting tool, software, accessory, and automation suppliers. If the OEM does not want to invest, propose job shops that will.
For example, Swiss-based Mold & Robotics Group is bringing its specialized in-mold labeling (IML) technology to the United States via a collaboration between two subsidiaries. Swiss-based subsidiary H. Müller-Fabriquede de Moules SA, a global specialist in IML, will transfer its technology and expertise to sister company CBW Automation, Inc. of Fort Collins, Colorado, enabling the cutting-edge IML systems to be manufactured in North America for the first time. The technology eliminates secondary printing manufacturing costs and enhances product security through specialty inks that can provide anti-counterfeiting measures. “There is strong growth for in-mold labeling systems in North America, and our customers are hungry for domestically produced systems that reduce shipping costs and deliver time-to-market benefits,” said Taras Konowal, North American director of sales and marketing for CBW Automation.
2. Set Cost Objectives
Discover what you can about current Free-On-Board (FOB) price differences for the United States vs. offshore for specific components. Find out if China tariffs apply. Use the Reshoring Initiative TCO (Total Cost of Ownership) Estimator to quantify the hidden costs. For example, if the U.S. FOB price is 25% higher than the offshore price and the hidden costs are 20% of price, the U.S. TCO is still 5% higher than offshore TCO. Your goal would be to get 5 to 10% out of the manufacturing cost. Promote your products that help companies meet those goals.
3. Be the Solution
Promote your products as solutions to U.S. dependencies. List components where you make enough impact to make reshoring feasible. When the customer calculates ROI on a domestic investment vs. offshore sourcing, be sure they use TCO, not the FOB price. Starting with a 5% TCO gap, the ROI is much higher than trying to overcome a 25% price gap.
4. Support Skilled Workforce Training
The U.S. workforce, on average, lacks the skills of top competitor countries, such as Germany and Switzerland. In my experience, the best operators and programmers can often cut cycle times by 20 to 40% vs. the average worker. By providing training that takes your customers to the German skill level, you will increase your share of the U.S. market and increase the size of the U.S. market.
5. Reduce Lead Time
Help companies improve delivery times. A four-to six-week shipping time advantage vs. Asia time-frame can be a huge advantage if not lost in the factory. Propose solutions based on automation, lean, and Quick Response Manufacturing (https://www.qrm.com/). Report the reshoring successes your technology has enabled to the Reshoring Initiative, and we will promote them to the marketplace.
For example, locating production in-house will increase the availability and speed of orthopedic care at the Hospital for Special Surgery (HSS). Since 2016, HSS has been sourcing from LimaCorporate, an Italian medical device company specializing in reconstructive and custom orthopedic technology. LimaCorporate will now operate a 3D-printing facility directly on the New York campus of the HSS. “The close integration between surgeons and engineers is invaluable for designing and refining joint replacements and identifying new solutions for the most complex patient cases,” said Leonard Achan, RN, MA, ANP, Chief Innovation Officer at HSS.
6. Take Advantage of the IMTS Rebuilding the Supply Chain Survey
This survey provides an opportunity for including OEMs, job shops, technology suppliers, and distributors to identify actual and potential reshoring successes. The survey gathers information on what products and components offer the biggest opportunities for reshoring; what advanced manufacturing technology is needed to enable the reshoring; and to what degree the pandemic disrupted supply chains.
The survey takes about five minutes to complete. Results will be published in March on the AMT website and on IMTS.com/supply-chain, a one-stop repository for supply chain information, content, and guidance resources.
7. Tap into Industry Resources
The following resources of industry organizations and associations can help evaluate reshoring needs.
- The Reshoring Initiative website provides tools to help companies decide objectively whether their overhead will come down more than their manufacturing cost goes up when sourcing or producing locally. The ISP (Import Substitution Program) helps supply chain companies find OEMs to convert from importers into customers by using the TCO tool. The SCG (Supply Chain Gaps) program was designed to identify and fill U.S. supply chain gaps. For help, email firstname.lastname@example.org
- Local Manufacturing Extension Partnerships (MEPs) of the National Institute of Standards and Technology has the Supplier Scouting Assistance program. Five MEPs are already offering the Reshoring Initiative programs listed above.
- Reshoring Initiative programs listed above.
- Your customers as well as advanced manufacturers, job shop owners, and OEMs are experiencing supply chain challenges, uncertainties, and questions. In an extraordinary effort to support you and the industry, AMT – The Association for Manufacturing and IMTS are dedicating signiﬁcant staff and ﬁnancial resources to help you rethink, reengage, and reestablish supply chains. Visit www.IMTS.com/Supply-Chain/ to learn more.
Putting it all Together
Investing time to find business opportunities for reshoring combined with optimal manufacturing technology, using industry resources like TCO, better skills training, and faster deliveries could make the U.S. competitive enough to increase domestic manufacturing by 20 to 30%, raising technology sales by 20% to meet the increased demand.