Off-shore vs Local is another fine balancing act that needs to be accounted for in supply chain considerations. Dual shore, near shore and reshore are new concepts that are changing its landscape, but the devil is in the details. “I want this business to make money and not steel” was the comment by a South Chicago Steel mill CEO in subscribing to the offshore bandwagon in the eary’90s. In a recent conference conducted at mHUB sponsored by 5th 3rd Bank titled “Inside the Global Supply Chain” the conversations touched on the retiring workforce as we think of reshoring lost manufacturing capabilities, governmental policy changes that need to be implemented, and developing a curriculum for training in services from an education perspective that would help fill the dire need of skills gap – this is estimated to be around 58000 in the Chicagoland area alone.
The Covid pandemic, the invasion of Ukraine and the recent surge in oil prices has increased shipping cost more than 10x. All of these conditions and the implications are to trading with hostile nations – all need to be re-assessed for the entire value stream to figure out an optimal basis for supply chain. Now more than ever, North American OEMs are strengthening their supply chains by turning to domestic manufacturers — in fact, reshoring is expected to surge by 38% in 2022, the largest jump on record. Reshoring would mean more robotic production, and the effects of such automation to workforce capacity has to be understood with definite reduction in the numbers going forward. But as rightly put by Victor Hugo in Les Misérables, Progress is the Mode for Mankind – and cannot be stopped and bigger and better replacements will be discovered and made available to satiate the needs of the workforce – especially since it is a circular effect of consumers having more buying power. A new concept called Dual shore is where tools could be manufactured in the proximity of areas where raw materials and workforce was appropriate and then shipped to manufacturing facilities where the impact on logistics for production would then be minimized.
Effects of climate change, sustainability, and social purpose vs the Amazon way to make profit are also considerations to draw this fine balance in supply chain. Statistics show that albeit more than 60% of the consumers are pro-green, only 27% really put it in practice. So there is a question of the effect on the bottom line – wherein customers mostly think with their head and not with their heart when it comes to their wallet – that needs to be addressed.
Advances in digital manufacturing have dramatically changed the U.S. supply chain over the last decade. While some manufacturers are still struggling with the first step (going paperless), GPS systems are enabling unprecedented visibility into logistics, and online retailers have raised everyone’s expectations on the precision and speed of on-demand delivery. It’s no longer acceptable to have no idea when a delivery will arrive. And manufacturers want to have as little inventory as possible on hand to reduce costly waste and support “just-in-time” production.
In the real estate business, there is an adage: It’s all about location, location, location – unless you are in Atlanta where it is Peachtree, Peachtree, Peachtree. Also, this: The past is history, the future is a mystery, but the present is a gift! For supply chain it is appropriately stated succinctly by Brian Laung Aoaeh: The past ran on supply chains. The present runs on supply chains. The future will run on supply chains. The world is a supply chain™.
NI+IN UCHIL Founder, CEO & Technical Evangelist
nitin.uchil@numorpho.com