The ongoing reshoring trend is picking up steam. While it’s true that the media is trumpeting reshoring with a bit of hype & rah-rah-ism, the intentions of more US manufacturers to investigate repatriation of production is undeniable. Small & medium manufacturers must adjust their messaging – primarily via their Web presence – to enunciate their value to prospects & the market in contexts that resonate with these reshoring companies. And it’s becoming more critical as 2011 races by. – AJ, 07 JUL ’11
Many, MANY, MANY manufacturing companies in the US have discovered unexpected costs and risks from pursuing low-cost production through extended supply chains. And 1/3 of them say they’re investigating their options to return work to the US. In the past year, reshoring (or backshoring, or inshoring) has slowly evolved from a trickle to a trend. There’s still a long way to go, but it’s happening.
This phenomenon is awfully encouraging, and it offers manufacturers opportunities to market and communicate more effectively – and to get more of that work that’s coming back.
But few are capitalizing on the reshoring momentum, and that’s a shame.
Don’t just expect this trend to drop work in your lap. You can use the force. Present your business as a reshoring rock star to speak to manufacturers investigating their options and you can attract more opportunities and build new (and rebuild old) relationships. And help spread the reshoring message in the process.
For those buyers & sourcing professionals that manage stables of custom suppliers, managing, anticipating and overcoming supply chain risk in-country is tough enough – add 10,000 miles, a different culture and language to the equation and it turns into a real headache, real quick.
Current political events in Egypt, Libya and the Middle East are pushing the cost of oil to record highs. CEOs and their sourcing and supply chain managers are losing sleep these days like the crew of Two And A Half Men. Some of these cats are in a pickle, and they’re desperate to find alternatives with less costs and less risk.
AND there are manufacturers selecting US-based suppliers right now, to avoid the supply chain risks and costs before they learn the hard way.
So, as a small or medium sized manufacturer you’d do well to express your value, benefits and capabilities in the context of these emerging trends. After all, these are the pain points your customers are feeling most now, right?
Here are 8 reshoring topics to ‘speak’ to and ways to best portray yourself as a strong reshoring partner. Right now.
- Logistics: It’s not just rising costs of oil, shipping and compliance – it’s volatility. People like stability, and your prospects and customers are no different. Rapid changes in these costs – like the rising cost of oil and its impact on all logistics – alter projections and budgets. Express the value you bring just from being close, as well as what logistics partnerships you’re in and experience you have overcoming disruptions to get product and parts to customers on time.
- Intellectual Property Protection: Your customers may not see these costs right away, but protecting their designs and products in countries with varying or poorly enforced IP laws can be awfully expensive and flat-out disastrous. Use your Website to explain and show what you do and what you have in place to protect your customers’ most precious possessions.
- Proximity to Research & Development: Closeness isn’t just important for saving and stabilizing shipping costs. Many companies – as diverse as NCR & Sauder – have found that separating their production and R&D divisions has stifled innovation of new products and impeded responding to customer and market demands. Don’t just explain that you’re close – define in detail how you can plug in as a node in a customer’s supply chain, participate in the design process and contribute to its innovation and response trajectories. While R&D isn’t making the largest headlines these days, this may represent your greatest opportunity to capitalize on the reshoring trend through a marketing message that touts those strengths.
- Currency & Social Stability: Volatility in financial markets due to unrest or unexpected fiscal crises are compounded when they cross economies, cultures and countries. Today in China, an emerging labor shortage, unionization & strikes, and unbridled growth are presenting problems for embedded western countries. Portraying your longevity, fiscal health and stability as a business through long-term relationships can have an important influence on companies looking for localized production sources.
- Language, Communications & Training: The accumulative costs associated with the loss of momentum due to these three elements are gradual, but real. And costly. It may feel good to the C-suite, but those on the shop floor and in the trenches know the loss of efficiency and velocity that these added efforts bring. And you could add ‘retraining’ to this list – because instability in a foreign workforce means restarting an already cumbersome training cycle. Share your stability, trained workforce and abilities to work efficiently with other customers throughout the product life cycle as cost saving for prospective clients.
- Quality & Product Development: Maintaining quality and tolerances of products adds significantly to their overall costs through repairs, and many western companies have been willing to pay them in return for less expensive labor costs in emerging markets. But consumers, retail and technical customers are becoming less tolerant (pun intended) with the timelines associated with making a product to spec twice. Giving specific examples of your ability to comply with, maintain, and even improve upon strict quality requirements THE FIRST TIME will give you an edge, especially to sourcing and buying professionals under duress. And making the case by associating those capabilities to their bottom line is a slam dunk.
- Total Cost of Ownership: Manufacturers in mature manufacturing markets that are exploring their reshoring options have done so based on TCO. Until they understand their true overall costs, those that aren’t won’t. By couching your value to prospects as an actual overall cost savings throughout the product and development life cycle, you can perpetuate this message and increase the likelihood that you’ll be engaged by new customers.
- Reach Out: Past customers and business partners may be looking to repatriate production from ‘low-cost’ countries to the US or North America. After they originally pulled the work, have you stayed in touch? Picking up the phone, sharing some emails that impart your value from a reshoring perspective, and providing them with a Total Cost of Ownership perspective may be all it takes to put you back to ‘top of mind.’ Hey, it beats a poke in the eye with a sharp stick. A former customer may be one of that 1/3 that’s looking to reshore now. You might not know unless you try.
Present your company as a dependable, valuable and TCO-saving source and partner in every medium you can – your Website, your marketing materials & communications, your conversations and on every Web platform your customers and prospects use to find suppliers like you.
For a primer on Total Cost of Ownership, constructing a compelling message for your customers, the details of the reshoring trend and more you can do to get involved, check out The Reshoring Initiative.