Can We Bring Manufacturing Back?
June 03, 2013 - SCMR Editorial
I was teaching a workshop last week in Harrison, Arkansas and arrived early the day before. With an extra few hours to kill, I decided to drive around Harrison’s main street which included lunch at the Dixie Café and a stop at Wal-Mart.
It’s been a while since I’ve been inside a Wal-Mart store, but I am familiar with Wal-Mart’s procurement processes in China, so I decided to conduct a fun little experiment. I picked up 22 random items and looked for the Country of Origin on each item. Of these, 19 were labeled “Made in China”, 2 were “Made in El Salvador,”, and 1 was “Made in India.” I made an effort to find anything that was labeled “Made in the USA” and eventually found a couple of things. I also tried to find the new 1880 towels that have been all over the news because production of these towels was reshored from China to Georgia. These towels are supposed to be carried at Wal-Mart stores. But there weren’t any in this store.
The assortment of Chinese merchandise was astounding. Even I was surprised, knowing that 40% of the world’s goods are manufactured in China. But to see it on the racks, on the shelves, stacked in aisles and on hangers was a real eye-opener. We demand rock-bottom prices on the things we buy and as a result, Wal-Mart turns to low-cost producers in China, and fills its stores with Chinese merchandise. But Wal-Mart has also earmarked $50 billion to buy goods from US manufacturers over the next decade. Wal-Mart is on board to try and shift the tide back to America.
If we truly want to bring manufacturing back to the US, we have a very long way to go. In January, my consulting firm rolled out a new product called “Bring Manufacturing Back.” It’s a 6-week program to help our clients evaluate what they could make in the US. This process is not as simple as it appears. There are so many aspects including costs, technologies, skills, localization, government incentives and others. It is also important to evaluate what a company should keep manufacturing in China for the burgeoning Chinese market.
I sense there is a real shift in thinking as senior operations and supply chain executives take a giant step up and consider their global manufacturing strategy, not just the cheapest production environment. It seems to me, this is the next evolution in global supply chains.
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!