"Social Reshoring" is a Win-Win with TCO

Labor costs are still higher in the U.S. than they are in China, but this is not the only piece of the puzzle manufacturers are using these days to determine whether to offshore or reshore production. Thanks to total cost of ownership (TCO) calculations, manufacturers are realizing that sacrificing a little in labor costs can be worth a lot in total cost. Higher productivity, quality, and ease of redesign combined with shorter lead times and lower freight and inventory costs are more than worth the margin on American labor. Many manufacturers are seeing that using TCO can increase profit margins as well as economic and commercial welfare in their communities.

According to one strategist, Thorsten Hoins, in a post titled “Consider Social Reshoring,” what many manufacturers may not be capitalizing on is their ability to improve social welfare by creating jobs where they might not previously have existed—and, yes, still remain cost-competitive. FVO Solutions, a provider of U.S.-based manufacturing and third party logistics services for private and public firms, maintains cost-competitiveness and provides socially-conscious Made in USA goods and services in one fell swoop. Their coup de grâce is that they “provide employment opportunities that would otherwise not exist”: operating as a not-for-profit, they practice what Hoins calls “social reshoring". In his definition, social reshoring is “[t]he practice of bringing outsourced labor back to the location from which they were originally offshored and create price competitive jobs in our own communities: for veterans, wounded warriors, at-risk youth, people with disabilities and others with barriers to employment.”

He suggests that by implementing social reshoring, manufacturers can bring jobs back to all Americans while increasing profitability and competitiveness: it's a win-win.

See Thorstein Hoins' full post here.

Is your company using a TCO model for sourcing decisions? Try the free Total Cost of Ownership Estimator.

Reshoring IT Hardware Leads to TCO Cost Savings and Risk Avoidance

A recent post on Planet Magpie, an IT blog, asks the seemingly-simple but surprisingly-complicated question, “where did your computers come from?” And perhaps more importantly, why should you care?

Reshoring Initiative June 2014 Newsletter

In the News

Surveys reveal data on reshoring trend
The Entrada Group conducted a single blind study and found “Re-shoring getting more attention by the day.” Some of the conclusions they found:

• 62% of respondents rank the United States and Mexico ahead of China now as top “low-cost” manufacturing locations
• Offshore cost savings are not always realized — companies that expanded to a “low-cost manufacturing location” achieved their goals to a large extent only half of the time, with half of them realizing just moderate savings or worse.

The MIT Forum for Supply Chain Innovation announced recently that it has launched its 2014 global manufacturing survey. To participate, click here. The survey will follow up on the 2012 survey and report with Supply Chain Digest, "U.S. Re-shoring: A Turning Point."

Another angle on TCO - Do you know what your Priceberg is?

Check out this great article by Kate Vitasek: Don’t Re-shore a Priceberg

Apr 11, 2014

Excerpts: 

"Best Value takes procurement professionals out of the price-only focus so that they understand the total cost of the deal or enterprise in front of them. This is TCO. Best Value and TCO go hand-in-hand, and when understood and implemented properly, pricing becomes value-based and becomes a win-win."

Reshoring Initiative April 2014 Newsletter

In the News

The second half of winter was a busy time for both reshoring and the Initiative.

Mississippi and Pennsylvania are leading the reshoring charge!
The Initiative is training teams in Mississippi and Pennsylvania to help companies reevaluate offshoring. To participate, companies in those states can contact:

• Mississippi: Dr. Clay Walden, Director, CAVS Extension Mississippi State University at walden@cavse.msstate.edu
• Pennsylvania:  Maureen Mulcahy, NEPIRC Supply Chain Specialist at maureen@nepirc.com

We anticipate a similar effort in Alabama and are talking to other states and cities. If you would like to accelerate reshoring in your state, please put us in touch with your economic development organization, MEP or other groups that want manufacturing to grow.

Reshoring Initiative's Sandy Montalbano to present at DFMA

Sandy Montalbano will be speaking on behalf of the Reshoring Initiative at the DFMA 2014 International Forum. The innovation advantages of having manufacturing near engineering is a major driving force in reshoring.  We are delighted to have this opportunity to update the DFMA community on reshoring and TCO. See event details below. 

Sales Rep sees great value in Reshoring Initiative's offerings

Good Morning Harry,

I met you last week on a transit bus* to O’Hare airport. You gave me your card so I wanted to reach out and thank you again for speaking with me. After reviewing your website I believe your companies initiative is incredible. Being able to bring more businesses back to the US to give Americans more job opportunities is exactly what this country needs to start thriving again. Being in the logistics field I know we rely primarily on these types of businesses in order to grow our business as well. ...I wanted to thank you again for your insight and appreciate what you are trying to do.

Have a great day,

Christian Lambert

Sales Representative

C.H. Robinson Worldwide, Inc.

Chicago South Branch

P-630.972.3511

F-630.739.1379

christian.lambert@chrobinson.com

 *As you can see, Harry  is promoting on the bus. 
Please promote reshoring any time you can.