As the U.S. manufacturing sector continues to expand economically, the growth is making waves across the nation and changing the face of the manufacturing supply chain. For years, American manufacturers have been outsourcing work to plants overseas, but a nationwide push to bring that work back to domestic shores has led to more and more U.S.-based manufacturers to reshore. As a result, supply chains are becoming much more local, the sector is getting stronger and manufacturers are reaping all the benefits.
Improving Conditions Open the Door to Reshore
The Institute for Supply Management's most recent Manufacturing ISM Report on Business revealed that the manufacturing sector saw its 30th continued month of growth in June, with its PMI index climbing 0.7 points from May's numbers to 53.5. Anything above a score of 50 indicates expansion. One respondent to the monthly report, from the transportation equipment industry, indicated that conditions are holding in the U.S. while they are growing weaker in Asia and Europe.
"91% of manufacturers worry about global disruptions."
This is a prime example of why domestic supply chains are becoming an increasingly common occurrence. In fact, an infographic from the Hollings Manufacturing Extension Partnership (MEP) pointed out that global supply chain disruptions are a top concern for 91 percent of manufacturers. When the entire supply chain is all in one country, the risk of being affected by global issues declines immensely.
Benefits of Local Supply Chains
In addition to reducing environmental risks, moving to a domestic supply chain creates a slew of other benefits for every company involved, and the consumer too. Reduced cost is, of course, high on the list of perks, as logistics will be significantly cheaper when inventory is not being shipped from halfway around the world. This also aids in reducing lead time, which is a major boon for original equipment manufacturers (OEMs) working toward lean manufacturing goals. When every step of the supply chain is in closer proximity, it also allows things to happen faster, which MEP pointed it can bolster output.
The success of domestic supply chains is clear, as evidenced by the Reshoring Initiative's 2014 data report. It showed that reshoring rose 20 percent from 2013 to 2014. While government incentives may be the top motivator for companies to bring their business back to the States, it isn't the only reason. Having access to skilled labor, reducing freight costs and risks and even being able to claim the product is "Made in the U.S.A." are all bolstering efforts to return to U.S. soil. It also puts the business closer to the customer, which enhances reliability and allows for a faster, more efficient supply chain from start to finish.
Check out MEP's infographic to find out more about American supply chains: