Reshoring, the Value Chain and the Power of Automation

Auto Supply Chain Prophets

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Reshoring doesn’t mean what some companies think it means.

Bringing manufacturing back to the U.S. is all the rage. According to The Reshoring Institute Executive Director Rosemary Coates, there’s more to it than what meets the eye.

“A mistake companies make is thinking about reshoring [as] bringing all your production back to the U.S. — that's not really the way global companies think these days. Instead, they're looking at the global manufacturing landscape, and determining if they should keep some of their production in Asia — specifically, because it's a huge growth market, especially for automotive.”

Organizations also mistakenly view “supply chain” as generic and singular, instead of a complex orchestration of multiple supply chains.

Themes discussed in this episode:

• The supply chain isn’t just purchasing — it’s an umbrella term for multiple operational functions.
• Post-pandemic, risk is a fundamental component of supply chain strategy.
• Local for local means manufacturing close to market, with the local economy and the environment in mind.
• Boards are increasingly demanding that companies embrace environmental, social and governance (ESG).
• Enterprise resource planning (ERP) needs to integrate data understandable by all users and systems in a supply chain.
• The most cutting-edge supply chains will drive decision-making with data.

Featured on this Episode

Name: Rosemary Coates

Title: Executive director and founder of The Reshoring Institute

About: As a supply chain professional with many talents, Rosemary provides insight and expertise into automotive supply chain management and the growing trend of reshoring.

Connect: LinkedIn | Twitter

Episode Highlights

Timestamped inflection points from the show

[1:50] The supply chain umbrella: Supply chain isn’t just purchasing — it encompasses front-end forecasting and planning, procurement, manufacturing, logistics and import and export as well.

[2:52] Trending reshorewards: The first step toward reshoring is talking about methodologies based on total cost of ownership. But the pandemic sent the conversation into overdrive — now we’re talking risk and strategy.

[4:06] EV wins: There are already electric stirrings in the U.S. in places like Nevada and South Carolina. But infrastructure in the form of charging stations remains a top priority for moving EV ahead.

[5:14] Bet spreading: It’s a mistake to see reshoring as bringing all production back to the U.S.. The concept of local for local means manufacturing close to market for both economic and environmental reasons.

[7:16] Embracing ESG: What was once a nice-to-have is now a requirement, as boards decide ESG is a top priority for sustainability.

[8:31] Top tier strategizing: The pandemic showed supply chain to be essential. It really did become the “value chain” people had been talking about for years.

[10:19] Old-school hero recognition: Thanks to the internet and improved communications, reliance on firefighting in automotive is dying out. The unstoppable rise of AI provides a glimpse into the future of exciting supply chain applications.

[12:27] Spreadsheet woes: The problem with your pivot tables is that they only work for you. Long-term ERP integration requires extracting data for all systems and users.

[13:40] Be the cutting edge: Supply chains of the future will need to use technology to understand captured data and make better decisions. Case in point: Sharp supply chain companies caught signals from the Detroit of China (Wuhan) weeks before the pandemic frenzy hit the mainstream, in order to think and act fast for their clients.

[17:30] Unique and special supply chains: It’s a mistake to use “supply chain” as a generic term, Rosemary explains. Managing multiple supply chains is a lot more complicated now, and requires real orchestration.

[19:23] Cost offsetting: Between foreign-trade zones and automation, companies are keen to cut labor costs — which are comparatively high in the U.S.. But China is no longer on the low end either: India, Vietnam and Mexico take the prize.

Top quotes

[1:51] Rosemary: “We need to think about supply chain as being an umbrella term. And under that umbrella includes all of the operations of a firm: … forecasting and planning on the front end, procurement, purchasing, certainly manufacturing operations… logistics, import [and] export. However, I find myself explaining that a lot: Because [when] people hear supply chain they think purchasing, and that's only one small slice.”

[5:14] Rosemary: “A mistake companies make is thinking about reshoring [as] bringing all your production back to the U.S. — that's not really the way global companies think these days. Instead, they're looking at the global manufacturing landscape, and determining if they should keep some of their production in Asia — specifically, because it's a huge growth market, especially for automotive.”

[9:39] Rosemary: “This is a big change: in not only notoriety, but the acceptance that supply chain is the heart and soul of the manufacturing company, and results in a seat at the table [in] the boardroom [as the] chief supply chain officer [with] much more visibility at the executive level.”

[11:30] Rosemary: “There are all kinds of applications throughout supply chain where AI is going to be used extensively … making it easier, more efficient and giving us an opportunity to make decisions based on actual data and facts. In the past, we were just picking up the phone and trying to call somebody and get [a] shipment on the plane — we don't do that so much anymore.”

[16:48] Cathy: “Many automotive manufacturers were planning their semiconductor requirements in the same way that they were planning fasteners … And those are two completely different supply chains. They require a different set of criteria and planning parameters. So that's a key message that we've been really emphasizing, especially in the automotive space: that we have to be a lot more discerning in how we are planning those supply chains.”