Many companies go to offshore suppliers looking for lower costs. It’s true that, despite the higher transportation and storage costs of offshoring, companies do save money using suppliers from countries with cheap labor. However, offshoring creates increasingly complex supply chains, creating opportunities for things to go wrong and leading many companies to consider reshoring. The ongoing success of any manufacturing operation hinges on reducing the risk of supply chain disruptions.
While offshore production may reduce some costs in the short term, it also makes supply chains more vulnerable to disruptions. These can take many forms, including extreme weather, geopolitical developments, or—as we learned in 2020—unpredictable global emergencies like the COVID-19 pandemic. Partnering with a domestic manufacturer safeguards operations by reducing the risk of supply chain disruptions and delays associated with offshore supply chains.
The greater the distance and the more national borders between a company and supplier, the more risk is inherent in the supply chain. Manufacturers already risk disruptions from unexpected, uncontrollable events locally. When placing essential suppliers in other countries, a random issue in any of those countries or locations can upset an entire operation.
Extreme weather can devastate global supply chains. Virtually all industries have experienced the fallout from such an event. In 2011, for example, the earthquake and tsunami in Japan disrupted production and transportation for months, affecting global supply chains in the automotive, energy, manufacturing, and countless other industries.
Of course, domestic suppliers also experience natural disasters, but they reduce the risk of supply chain disruptions overall. Companies in the inland United States, for example, may experience occasional severe weather, but less distance between companies and suppliers tends to equal shorter recovery. Additionally, many inland suppliers have begun adapting by implementing various risk prevention procedures. Some of those include:
Geopolitical risks exist for offshore suppliers. Government policies can disrupt supply chains with tax or tariff changes, environmental or labor regulations, and new or updated trade agreements. U.S. trade policy offers more stability and predictability. If a supplier exists in another country’s jurisdiction, companies have twice as many governments to navigate. Political developments in any one of them can have major effects on a supply chain.
Even countries considered “stable” have unpredictable effects on international supply chains. For example, when the U.K. voted to exit the European Union in 2016, European and global supply chains that had existed for decades had to figure out how to adapt quickly. Using domestic manufacturing partners rather than offshore suppliers ensures a reduction of the risk of supply chain disruptions that result from foreign political decisions.
When supporting U.S.-based manufacturers, offshore suppliers typically require lengthy, complex supply chains. Offshore suppliers tend to have extended lead times, leaving companies vulnerable to delays or even shutdowns when particular locations or transportation routes have problems. Reducing the risk of supply chain disruptions becomes more complicated when dealing with lengthy international shipping routes.
For most manufacturers, the supply chain accounts for most of the total order fulfillment lead time—by far. Transporting materials overseas doesn’t just make those lead times even longer. The farther away from the supplier, the more necessary shipping transfers—and the more opportunities for problems and delays. When a product or material has to move between countries, border inspections slow delivery further.
When companies buy verified U.S. metals from a trusted domestic supplier, they get a quality product, excellent customer service, and quick delivery. Outsourcing production with a domestic machine shop offers an effective way of reducing the risk of supply chain disruptions, and it can improve production planning and customer responsiveness.
Many companies have begun rethinking the supposed advantages of offshoring. While the costs might appear lower upfront, the risks outweigh the benefits. An ISO 9001 certified, domestic machine shop can strengthen a supply chain with speed, flexibility, and quality materials. By eliminating the risks and costs of using offshore vendors, it’s also good for the bottom line.
At Plethora, we feature the best machinists and engineers working with the most cutting-edge manufacturing technology in the industry. We have ISO 9001 certification and constantly look for ways to improve our processes to offer our customers the highest quality parts and services. Our online DFM and quoting systems are ready to receive your data so we can begin working with you on your next project. To get started, upload your design files to Quote My Part or call us at 415-726-2256.
The Plethora Team
The Plethora team is your go-to CNC manufacturer for hardware done right the first time. We have the tools and experience needed to create high quality custom parts quickly and with precision, whether you need a prototype or production run.