There is a growing trend to reshore manufacturing back to the U.S. as managers re-calculate and compare the true total costs of production. Still, there is a range of hidden metrics that are not factored often enough when determining where to produce goods. 

 

 

What is refueling the trend of reshoring? Brands are not returning on an impulse or because of public pressure, IndustryWeek reports. They are doing so "to more efficiently serve the world's largest free market. Unlike when they left, this time they are measuring why they should return."

 

Too many companies moved their production to countries like China based solely on the unit prices. "Buyers are rewarded with the money they save their company based on the piece price," added Nash-Hoff. "They fail to see the bigger picture."

 

As the cost of manufacturing overseas is being re-examined using total costs models, several factors have been at the forefront. Nash-Hoff listed a few of the major factors that first led to bringing work back to the U.S.:

• Inventory: "Businesses are being forced to buy larger lots to get the best China price," she explained.
• Cash flow: "Lower-volume businesses are being forced to pay for parts before they're shipped... Only the major companies are getting favorable terms."
• Travel: This can chip away at savings "if traveling to Asia becomes necessary or frequent," which she said often happens when "the qualities of parts are sub-par and the manufacturing has to be reworked."

 

Read the full article at Industry Market Trend's website