It’s no secret: much of the time, American businesses can save money by sourcing essential parts from overseas manufacturers. These savings are possible because other markets often offer reduced labor costs, impose a smaller tax burden than the U.S. does, and establish less costly environmental rules and regulations. It’s no surprise, then, that in recent years many American businesses have come to rely so heavily on overseas suppliers.
And for some businesses, that outsourcing is a smart decision—but it’s one that many others have come to reconsider in recent years as they begin the process of reshoring manufacturing. These businesses have learned—often the hard way—that finding the lowest price per part or tooling cost is not the same thing as maximizing value. This is particularly true when it comes to complex production of highly engineered solutions for which plastic injection molding is specifically well-suited. As a result, many businesses have turned to reshoring in order to secure stable supply chains, achieve long-term growth, and maximize revenue.
So if you’re considering reshoring manufacturing, here are three potential benefits of reshoring to keep in mind as you evaluate different supply chain options for your business.
Reshoring Benefit 1: Partnerships Add Long-Term Value to Your Business
A good supplier doesn’t just provide you with high-quality parts (though of course you must be able to count on them to give you exactly the parts you need when you need them). Instead, much of the value a good manufacturer provides comes from having a close and collaborative relationship.
That’s because markets are volatile and problems inevitably arise. When they do, you want to be working with a manufacturer who will go the extra mile to make things right—that is, you want to work with suppliers who are as invested in the relationship as you are. Because if you’re making decisions based just on minimizing cost, there’s a good chance you’ll end up working with people who do the same. Reshoring is a good way to find partners more focused on value than on cost.
Further, a supplier who is invested in a long-term partnership will help you do what you do better. A manufacturer should be able to help you troubleshoot your prototypes and suggest improvements based on their unique expertise in the manufacturing process—instead of treating you and your parts as just another job.
Reshoring Benefit 2: Avoid the Risks Threatening Overseas Suppliers
By involving foreign manufacturers, businesses render their supply chains—and therefore all of their operations—less stable. In part, this instability emerges for predictable reasons: coordinating with suppliers overseas makes the logistics more challenging, since different time zones and languages must be navigated. When it’s hard to get someone on the phone, it’s harder for a business to react to new challenges and opportunities.
But many of the risks posed by working with overseas suppliers are less predictable. Sometimes problems arise because another government changes its regulations, other times because of sharp shifts in geopolitics. These abrupt market transformations are of particular concern to companies working with advanced technologies, as they may find that their intellectual property becomes exposed to theft.
Sometimes the cost-savings overseas suppliers offer will be worth these risks. However, before taking them on, every business needs to honestly assess all the existential risks involved in not reshoring—and determine if taking on those risks is worth the cost savings.
Reshoring Benefit 3: Improve the Long-Term Impact of Your Manufacturing Processes
One risk of offshoring stands out in particular: when you don’t have a close relationship with your supplier, it becomes much harder to determine if their ethical and environmental standards match your own. Indeed, often manufacturers are able to offer lower costs because they have lower standards for quality, business practices, and environmental impact. Unfortunately, working with a company with low standards can damage your reputation and your brand—even if you were unaware of the problematic practices.
With more consumers than ever refusing to work with businesses who don’t adopt ethical and sustainable practices, you need to be sure that you work with manufacturers who are consistent with your brand. By reshoring to work with American manufacturers, you can be sure you know the environmental and labor rules they follow—and therefore keep your commitments to your own customers. That’s the kind of investment that can save your company a lot of money in the long run.
To learn more about the costs and benefits of reshoring, talk to SigmaPro today and see how the right domestic manufacturer can help you achieve—and maintain—a competitive advantage.