How modern ERP solutions can help manufacturers reshore production

Reference: What’s driving the Reshoring Movement? A look into Key Trends for Manufacturers - White Paper

During the 2000s, in an effort to take advantage of low wages offshore, multinational corporations increased employment overseas by 2.4 million, according to the US Dept. of Commerce. However, according to the Economist, “Wages in China and India have been going up by 10-20% a year for the past decade, whereas manufacturing pay in America and Europe has barely budged.” Other low cost countries such as Vietnam, Indonesia and the Philippines still offer low wages, but not the efficiency and supply chains of the scale in China. Going forward, according to analysis published by PwC, the wage gap between advanced economies and emerging economies will shrink significantly by 2030.

The wage gap that drove companies offshore has narrowed, causing companies to reevaluate total costs. According to BCG, 50% of manufacturers with sales over $10 billion are actively considering reshoring to the United States; as are more than one third of companies with sales over $1 billion.

As companies adopt a more comprehensive total cost analysis they are finding that rising offshore labor rates combined with other “hidden costs” of offshoring often counterbalance any remaining savings from cheap price or labor abroad. They are also finding that separating research and development from manufacturing has a negative impact on innovation. Some of these companies are reshoring and sourcing in the U.S. because it makes good economic sense for them to do so.

In a whitepaper published by Engineering.com, they explore how modern ERP solutions can help the numerous logistics and supply chain challenges for manufacturers in the complex task of closing, moving and establishing new locations.

How technology can make reshoring easier

Technology can help enable reshoring as it allows manufacturers, contractors, and suppliers to take advantage of the shifting economic conditions and moving to locations that are in a closer proximity to customers, raw materials and incentives such as lower taxes, skilled workers etc.

By adopting highly flexible, modern, cloud-based ERP solutions, reshoring coupled with ERP can increase manufacturers’ speed, productivity and U.S. competitiveness.

Speed

  • Cloud deployment gives manufacturers greater flexibility. It provides the agility needed to support modern fast-changing conditions
  • The lower total cost of ownership of cloud solutions will help manufacturers upgrade and replace outdated systems and allow small to midsize organizations to compete with larger companies
  • ERP can provide greater agility and allows companies to connect to new branches, divisions, plants and suppliers with speed and end-to-end visibility
  • Productivity and Competitiveness

  • Technology helps companies implement Lean manufacturing
  • New ERP systems can run modern-day, robot infused factories and facilities that are critical to increasing competitiveness for reshoring
  • Modern ERP solutions help manufacturers boost workforce productivity from streamlining processes to eliminating disparate systems and communications gaps
  • Modern technology supports collaborative partnerships with suppliers
  • In summary, modern, ERP solutions give manufacturers the tools to increase speed to market, and boost productivity and the competitiveness needed to support reshoring efforts.

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