As described in Reading, Writing, Arithmetic and Reshoring companies were forced to or jumped on the bandwagon to move manufacturing offshore, in part, to lower cost of products or services. Accurate cost accounting started to expose hidden costs chipping away at margins. These hidden costs were not hidden but dumped in overhead and administrative costs. Once extracted, these costs became “surprises” not so welcomed by owners, board members, investors, and accountants. Electro Scientific Industries, Inc. (ESI) is a good example of failure to understand the true cost of moving manufacturing offshore.
Medical Device OEMs and contract manufacturers started to evaluate and move to reshoring eight to ten years ago, or more. Their move was initially driven by Food and Drug Administration quality regulations and risk. Soon they discovered the hidden cost of tariff increases, currency exchange rates, and work to coerce offshore manufacturers of components or products to develop and maintain process and quality controls. Their interest in Reshoring/ Inshoring is moving forward at a greater speed and intent ahead of and in the wake of COVID-19. The risk and cost associated with supply chain interruption, long lead times, and quality are being exposed.
Aerospace and Defense OEMS and contract manufacturers are in a similar but different position. Cost, quality, and reliability of products is paramount to safety and performance. In addition, national security and International Traffic in Arms regulations are of grave concern when manufacturing components or products off shore.
We will describe specific information regarding costs, quality and risks, from beginning to end of the product lifecycle. We will include “Sustainability”, a new twist to the story of Offshoring and Reshoring/Inshoring.
The Mervyn Group is ready to help you
- Evaluate cost of goods/ services sold in a comprehensive way (Value Stream Cost Accounting),
- Optimize processes and maximize efficiency (Operations Excellence, LEAN, SIOP, Technology and Automation), and
- Identify new suppliers and supply chains.
To enable your organization to rebound, survive and grow, and perhaps jump on the momentum to our shore.
Contact Debra Mervyn Debra@MervynGroup.com to learn more.
