60 seconds with Rosemary Coates, Reshoring Institute and theUniversity of San Diego
Modern talks to the executive director of the Reshoring Institute at the University of San Diego and president of Blue Silk Consulting about manufacturing and the supply chain.
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Title: Executive director of the Reshoring Institute at the University of San Diego and president of Blue Silk Consulting
Location: San Diego and San Francisco
Experience: 25 years experience in supply chain management and systems consulting
Primary Focus: Global and domestic supply chain management, including experience in outsourcing and reshoring domestic production.
Modern: At the Supply Chain Outlook Summit, you talked about your roles as a consultant, advising clients on their outsourcing strategies and also as the executive director of the Reshoring Institute, advising companies on how to bring some of that manufacturing back to North America and the United States. In a sense, you’ve seen them going and coming. How do you describe what is going on in the market today?
Coates: We reached a steady state where, for the first time in years, we’re bringing back as much manufacturing as we’re outsourcing. According to a recent study from Boston Consulting, 54% of U.S. manufacturers with more than $1 billion in revenue are considering reshoring some or all of their manufacturing. The fact that more than half of the companies are bringing manufacturing processes back onshore will have a significant effect on global procurement, logistics, trade and manufacturing strategies.
Modern: Why are more companies rethinking their global manufacturing outsourcing strategies?
Coates: Initially, companies outsourced for a number of reasons. Some wanted to save money on the cost of labor, others wanted a more low-cost environment to work in, while others did it just to follow what everyone else was doing at the time. Fast forward to 2015, and it’s clear now that many of those firms made this move without thinking through the total cost concept. They made simple decisions—based mainly on low labor cost—without thinking through all of the issues.
Modern: Why is this trend taking place?
Coates: As labor rates rise around the world, and as more quality control issues surface, companies are rethinking why they outsourced overseas in the first place. Now, they’re looking at what they should bring back. And from what we’re seeing, that’s primarily advanced manufacturing. This will shift the supply chain significantly as companies that are bringing in goods from Asia, India and South America now look to re-establish manufacturing, sourcing, and distribution networks here in the United States.
Modern: How will reshoring impact supply chains?
Coates: Despite the appetite and support for reshoring, the process is not as easy as you may think. It requires strategy, planning and a commitment to invest in rebalancing your global supply chain. We’re all living in a world where companies like Amazon literally ship overnight, and companies are going to have to figure out how to match that speed for industrial products, too. To get there, they’ll have to do a significant amount of re-engineering to their global supply chains.
Modern: So, is reshoring the answer to what ails manufacturing?
Coates: Well, we’re not going to go back to what manufacturing looked like in the 1960s. But, we’re taking steps in the right direction. And, in a sense, we don’t want to bring back 23-cent-an-hour T-shirt production. We should aim for advanced manufacturing jobs that pay between $45,000 and $85,000 a job. They are the crossover between manufacturing and engineering.
Modern: Reshoring has been a big part of the political dialogue. Why do you think it’s important now?
Coates: Because we’ve gotten to the point where it’s time to rethink the process, make products in the markets where they are sold, and help rebuild the American economy. It’s important for our future and our children’s future.
About the AuthorBridget McCrea, Editor Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996 and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at [email protected], or on Twitter @BridgetMcCrea
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