One of the buzzwords you can hear in U.S. manufacturing for the last few years is reshoring. Reshoring (opposite to offshoring) is a practice of bring manufacturing and service back to U.S. from overseas.
According to the latest survey done by Boston Consulting Group in 2015, U.S. manufacturing executives said that, in the next five years, their companies are likely to add factory capacity in the U.S. for goods sold domestically, while only twenty per cent were planning to do so in China.
Modern manufacturing competition is unlikely rely on low cost manufacturing in the future. My attention was caught by Chief Executive article GE CEO Jeff Immelt on the Future of GE-and of American Manufacturing. The following passage is the key in my view:
Today, materials are expensive and labor is relatively inexpensive. Today, the product is the process, more or less. And labor is a lot more flexible. If you look at an aircraft engine, the content of labor is probably less than 5 percent. We have two hours of labor in a refrigerator. So it really doesn’t matter if you make it in Mexico, the U.S. or China. Today it’s really about globalization, not about outsourcing; it’s how do I capture markets faster than the competition?
One of the key factors in global competition is lead time. I captured the following passage in Phillymag article – Boathouse Sports Reshoring:
The main factor was the lead time from when a customer placed an order to delivery. “Six months, and today it is even longer,” he said, of timelines at Chinese factories. “Compare that to how fast we can be now: average from the date of the order to out the door is twenty working days. And our workers are flexible; they can work anywhere in the factory and on any equipment. If all of a sudden we get a spike in demand for Gortex outerwear, a labor-intensive product, we can shift more resources and take advantage of it.”
Globalization, lead time, engineering and manufacturing process improvement. This is a future of product competition. It made me think about the role of product data and process management. In most of its parts companies are still managing product data and related processes in an isolated manner. During the last 10-15 years, the focus of PLM and related engineering and manufacturing software products was about how to control data. Global product engineering and manufacturing will demand a fresh look on how to manage manufacturing. It will require a global connected approach in managing information about product, manufacturing and supply chain options based on market demand and factory environments.
What is my conclusion? Manufacturing is moving from mass production at lowest cost into more complex, global and connected manufacturing environment. The ability to manage product data and processes on a global scale by connecting vital informational sources will become a competitive factor for manufacturing companies looking how to improve lead time and optimize cost. Efficient product data and process management will become a critical factor to build manufacturing competitiveness in the next decade. Just my thoughts…
Best, Oleg
