Offshoring, a practice that has for long been popular is fast losing ground. Today, businesses are more interested in executing their operations locally. Let’s find out the reasons behind this quick turn of events.
The Popularity of Offshoring
Offshoring has been popular for the last 20 to 30 years. Offshoring is the concept of transferring various business operations from the local country where the company is headquartered, to another country. Often, many countries would opt for the latter due to low labor rates. Many industries have been leveraging offshoring to enjoy their competitive advantages.
Studies conducted in 2001 established that many companies opted for offshoring in order to cut down costs and enable companies to concentrate on enhancing the quality of their products as well as enhancing their principal competencies. Things are however changing with offshoring becoming less popular in today’s evolving world where consumers are focusing on innovation, sustainability, and promoting local brands.
Many customers currently believe that local productions are of high quality. Reports published in the first half of the year 2019 suggest that there has been an increase in automating micro-factories in recent times. These are highly automated small factories that are not only locally based, but they are adopting the think global, build global manufacturing concept. Businesses that want to gain from this trend to achieve more local production can do so with ease.
Are we seeing the End of Offshoring
As has been the case with various economic oriented trends across the world, offshoring has immensely evolved to a point of becoming unsustainable and this has caused its gradual downfall. Some experts in the industry have likened offshoring to a bubble and while the bubble is yet to burst, it’s evident that it’s slowly deflating. Reports released by The Economist indicate that the increasing popularity of reshoring is a clear indication that manufacturing is
How can Automation Facilitate Local Production?
Recalling manufacturing operations comes with various advantages. These include; enhancing product quality, assuming full control of the product, and competitive benefits. Companies can accomplish this faster and easier with a universal robot. Advancements in the robotics industry allow companies to automate their operations from the beginning to the end. Case in study to illustrate how easy adopting local automation as opposed to offshoring can be is a certain eyewear manufacturing company based in the U.S. when the company was launched, the proprietors were committed to breaking a long-ingrained practice in eyewear manufacturing in the US.
According to the proprietors of this company, many of eyewear products in the market were produced overseas. They, therefore, wanted to manufacture a unique product. They achieved this by incorporating the Made in USA label in their products. With the help of other companies in the robotics sector, they configured a machine tending application using a Universal Robot in a record 5 days. They achieved all this with no previous robotics experience.
Today, the company still uses the same machining procedure which has been instrumental in their advancement. By delegating some of the repetitive tasks to robots, the proprietors and employees can focus on more important tasks such as handling orders and creating new product designs. Manufacturing costs are becoming cheaper and this has enhanced productivity in American factories.
As a result, many companies are willing to recall their production tasks to the country. Labor costs have been increasing in many countries and this is part of why companies are recalling their operations. There has been a tremendous improvement in engineering tools and automation and this has brought about complexity in the manufacturing sector.
The reshoring concept is fast becoming popular among various companies. This has been more common in the automotive and manufacturing companies. More companies are currently bringing recalling jobs to counter increasing labor costs in foreign countries, and embrace higher-level technology available locally. According to statistics, top reshoring companies have recalled up to 16,000 jobs to America within a five year period.