#Goodway industries manual#Having a distributed network of factories is not enough, especially if they rely solely on manual assembly. Of particular note is the role that automation plays in this rebalancing effort. According to Deloitte, “more than 80% of industries experienced supply chain disruptions because of the pandemic, and about 75% of companies are planning to accelerate their reshoring initiatives by building smart factories closer to home locations, or their customers’ point of need.” The entire industry is going through a transition where even companies who’ve wholly outsourced to China in the past are now completely reversing direction. But a good way to get started is to think first about where the majority of your end customers are and to try to align your supply chain as much as reasonably possible. There’s no simple blueprint for how a company should design their factory footprint. The optimal mix of local, regional, and global sites-for both suppliers and production operations-will vary from company to company. Other scenario modeling indicated that a “single, prolonged production-only shock would wipe out between 30-50% of one year’s EBITDA for companies in most industries…and on average, companies can expect losses equal to almost 45% of one year’s profits over the course of a decade.” In a recent McKinsey study, experts across four industries (automotive, pharmaceuticals, aerospace, and computers/electronics) reported experiencing material disruptions (those lasting a month or longer) every 3.7 years on average, with shorter disruptions happening even more frequently. It’s not “if” but “when” the next disruption will arise. What’s key to remember here is that the unexpected is a sure thing. It ensures you’re not overly exposed in any one region, as you never know when or where the next crisis will occur. It opens up the potential to shift capacity away from regions that are suddenly hard hit. Rebalancing, however, is the act of unwinding that consolidation-to some extent-to create a more distributed manufacturing footprint and, therefore, spread your risk.įor most large enterprise manufacturers, rebalancing essentially drives a redistribution of capacity, which creates more flexibility for where products can be made. But for a long time, the rewards (cheap labor and freight) outweighed the risks. Consolidation in manufacturing may streamline and simplify operations, but it is also inherently risky, akin to “putting all your eggs in one basket” by focusing production in one (or a very few) low-cost locations. What does rebalancing mean and why is it important?īefore we define rebalancing, let’s look at what it is not: consolidation. And two years later, supply chains are still struggling to catch up. When offshore production centered in China ground to a halt, raw materials were stranded, assembly lines stalled, and container ships sat idle. This is what global manufacturers had to face when the COVID-19 pandemic suddenly cut off access to what had, for many, become the most critical lynchpin of their manufacturing operations. And then it throws the entire stool off balance. Decades pass, and that leg becomes so thick, so solid and stable, that it makes the need for the others obsolete. Imagine one leg-China-growing in strength over time. In this case, picture the legs of the stool representing countries in which companies produce their goods. Welcome to world of manufacturing and global supply chains in the 2020s. Have you ever felt like your life might be out of balance? That your three-legged stool of career, family, and personal self-care could tip over at any moment? That a sudden loss, or unanticipated surge in demand in any one area could wreak havoc on the others? By Caroline Pan, chief marketing officer at Bright Machines
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