Many items these days are manufactured overseas. Take a walk around your house, pick up some items like a decoration or a random article of clothing and see where each was made, were they made in USA? The sad truth is that they probably were not. One of the most common markings to see is “Made in China” on items. Why is this? One of the biggest reasons for enlisting the help of overseas manufacturers is to cut down on production costs. However, this is beginning to change with the help and implementation of lean manufacturing and six sigma. Both of these tactics combined create a powerful change toward the efficiency of processes by eliminating unneeded wastes and improving current processes. According to Nick Tan on WMP Blog:
Companies use Lean tools like Value Stream Mapping to help understand their end to end supply chain and are starting to realize there are many other factors that go into the Total Cost of Production besides just per unit cost. They are seeing that the per unit cost of an item does not take into account high shipping cost, fees and duties, slower response to quality issues, waste of keeping large inventories, sending large teams internationally to deal with production/quality problems, loss of intellectual property and finally the slow reaction to the innovation of products. Now that companies are seeing the true total cost, many are realizing that the advantages of making their products in low wage countries are not as great as originally planned.
This is so true. Keeping production in the US eliminates all sorts of fees and shipping costs and essentially offsets the initial low cost of overseas manufacturing. In addition, with the help of lean there can be further opportunities for even more savings. Lean emphasizes the need to eliminate waste to help improve customer satisfaction and service. In order to implement lean effectively, all employees need to be onboard and adequately guided to maintain the lean practices once they have been put into place. Many employers who are interested in implementing lean tend to start off with the practices of 5S. 5S is a great starting point for lean because 5S focuses on creating a clean and orderly work environment and fundamentally sets the stage for digging into needed process and production improvements. These tools can really be beneficial to help within the reshoring movement currently taking place. Tan also states:
Reshoring is gaining momentum and will only get stronger. In a survey of American manufacturing companies in 2012, 37% of companies with annual sales above $1 billion said they were planning or actively considering moving production facilities from China to America.
This is an exciting time within the industrial sector. As many companies are choosing to become more efficient in order to bring production back to the US, the opportunity for US products increases. Furthermore, there are also other benefits such as more employment opportunities for US workers. Big changes are underway and there is no better time than now to start the process of lean within your business.
Resource: http://blog.westmonroepartners.com, by Nick Tan 27. June 2013