The more people you add into any project, the more complicated everything gets. Sometimes it makes sense to have as few people involved so that there are no crossed wires or misunderstandings, but often it’s more practical to have the people who specialize at a certain task lend their expertise to the matter. Supply chain management in manufacturing is by no means a simple process, but the United States is learning from past mistakes and they’re poised to start playing a little catch-up in the manufacturing world due to their expertise.
The Numbers Are In
There are 230,000 small manufacturing companies in the United States alone, according to a new Infographic from The National Institute of Standards and Technology’s Hollings Manufacturing Extension Partnership (MEP) Manufacturing Innovation Blog. We have included the infographic below. The supply chain for each manufacturer includes everyone remotely associated with the product, including distributors and suppliers. From the person who sources the original wood from a tree to the company that delivers the finished desk to the store: they all need to effectively fit under the supply chain management umbrella. Small manufacturers employ 42% of all manufacturing workers, so it represents a large portion of both local, state and national economies. Take even one out of commission, and you’ll start to see ripple effects which are typically farther reaching than anyone could initially anticipate.
The Benefits of Using US Workers
It’s an extremely attractive idea for business owners to outsource jobs overseas. After all, the owner is most often motivated by money and shareholders and there’s no question that people in other countries will do the job for much less than someone here will. Many may even think that supply chain management in manufacturing is just a nice term for outsourcing, however those same people often forget that America still does a lot of producing for people everywhere in the world. Staying within your own country not only means giving jobs to those with families, it also can make more financial sense in the long run. When there is some sort of catastrophe that will no doubt lead straight into a public relations nightmare, you can bet there was some breakdown within communication between the many different companies involved. This can be avoided when using skilled professionals who truly understand things like the language, cultural behaviors along with the other company’s expectations.
Government Weighs In on Supply Chain Management in Manufacturing
Of course the government will be promoting the message that it’s best to keep jobs within our borders, there’s no surprise there. However, they’re backing it up with real statistics and evidence. The President has started a National Network for Manufacturing Innovation (NNMI) and recently convened manufacturers in DC to get together and discuss their field. The 900,000 manufacturing jobs that have been added since 2010 would not have existed had it not been for the smaller companies. From NNMI’s website, there comes sharper focus on the program:
In September 2013, the President launched the Advanced Manufacturing Partnership Steering Committee 2.0 (AMP 2.0). AMP 2.0 was a renewed, cross-sector, national effort to secure U.S. leadership in the emerging technologies that will create high-quality manufacturing jobs and enhance America’s global competitiveness. The steering committee, whose members are among the nation’s leaders in industry, academia, and labor, was a working group of the President’s Council of Advisors on Science and Technology.
In his 2013 and 2014 State of the Union Addresses, the President called for the creation of a Nationwide Network for Manufacturing Innovation (NNMI) to scale up advanced manufacturing technologies and processes. He asked Congress to authorize investment—to be matched by private and non-federal funds to create an initial network of up to 15 institutes. Over 10 years, he proposed that the NNMI encompass 45 institutes.
On December 16, 2014, the President signed the Revitalize American Manufacturing Act, into law.
However, the smaller companies face big problems too, as their productivity and research/development lags behind that of larger firms. This convention was meant to start shedding light on solutions and to encourage the relationships necessary to thrive in this competitive field.
There are so many initiatives coming together painting a clearer picture of blue skies ahead for the US manufacturing world. Not only are companies leveraging technology for effective supply chain management in manufacturing such as Warehouse Management Systems, ERP, and Transportation Management Systems, but they’re also open to more forward-thinking strategies in all areas of the business. Even saving just a few seconds during the retrieval process can add up to larger profits over time. Too much change can ultimately just lead to unrest and confusion, but the government is encouraging the right shifts that will give our country the advantage necessary to be back on top.
Looking to the Leaders
Top firms take risks, and they don’t let price be the sole factor when they make their decisions. For example, Volvo was able to save both suppliers and their own company millions of dollars just by opening up discussion between themselves and their suppliers to cut out steps that weren’t necessary, stop bottleneck formations and reduce waste wherever possible. If they had let cost be the only thing that motivated them, they likely wouldn’t have ended up working with such cooperative companies. Often it’s a matter of asking the right person what they think, and then actually following up on what they say.
The Proximity Advantage
It can’t be overstated that location is incredibly important when it comes to business. A company might see an initial savings if they start having a portion of their products manufactured in a plant in India, but it doesn’t look at all of the unseen costs. Different regulations, rules, processes, people, time zones: these things can serve to make the people within the company incredibly discouraged and decrease productivity overall. It also opens up the possibility of a lot of extra mistakes. This is why we have seen the Reshoring Movement take off, and thanks to the Reshoring Initiative, we now have the Total Ownership Estimator™ to show all of those potential costs to include when thinking about offshoring, or potentially bringing manufacturing back to the United States through reshoring.
The End Goal
The benefits to effective supply chain management in manufacturing are literally endless. It not only boosts morale within a company, but also profits and ideas. A lot of this has already been covered within the previous sections, but you can save money by lowering your production and inventory costs. There is every reason to be optimistic that those in the field will continue improvements to mean major gains for the US economy.
INFOGRAPHIC: Supply Chain Management in Manufacturing
A recent recognition of the significance of supply chains on global competitiveness occurred last week when the White House assembled over 30 manufacturers at the Supply Chain Innovation Initiative Roundtable. Throughout the day’s discussion, manufacturing leaders shared their insights on the importance of collaboration among supply chain partners, leveraging U.S. innovation assets like those at the National Labs and the national network of MEP Centers and how-to scale technology resources and best practice resources to reach even the smallest companies in supply chains.
MEP’s newest infographic demonstrates the interdependence of companies at all levels of supply chains.