COVID impacted the global supply chain in a way we’ve never seen before and uncovered a logistics vulnerability that's been over looked for decades. Global supply chains were disrupted almost overnight, causing a ripple effect. As shipping and logistics bottlenecks started to cause production shortages many manufacturing operations came to a grinding halt. Now more than ever, businesses are looking to take a DIY-approach to manufacturing in an effort to reduce the risk of future shortages and shutdowns - and that means reshoring manufacturing operations.
The consideration of moving manufacturing back to North America from abroad – also known as reshoring or nearshoring – is being driven by several factors, with cost being at the top of the list. From transportation and labor costs, to travel restrictions and limited access to materials, reshoring is gaining momentum. According to a recent JacksonLewis article, "While relocating manufacturing may not be the “lowest cost” option, it may be the “best cost” option when weighed against supply chain resiliency and sustainability."
As reshoring takes hold, manufacturers are re-examining their processes around core issues such as materials management and material flow, labor efficiencies, use of space, all the way up to broader concerns including the impact to supply chains. Automated storage and retrieval systems (ASRS) can streamline materials handling processes and make it easier for companies to reshore manufacturing operations.
Cutting Reshoring Costs with ASRS
With global pandemics and other disruptions imminent, securing and diversifying your supply chain should be your top priority. Any time a manufacturing site can produce more with less—including less space—it becomes more cost competitive. Using ASRS to create more usable space for reshoring makes it possible to perform more value-added work using less labor and at a lower cost. Reshoring with ASRS is certainly worth consideration to help:
- Expand Manufacturing Capabilities
- Prevent Future Supply Chain Disruptions
- Reduce Labor Costs
- Access Inventory Faster
- Lower Transportation Costs
- Increase Capacity for Safety Stock
To make an informed decision, companies need to assess the total cost of ownership for offshoring versus reshoring.
Expand Manufacturing without Additional Space or Labor Resources
On paper, reshoring sounds great – reduced dependency on suppliers, tighter supply chain control and reduced transportation costs - but not many manufactures have the space and labor resources to expand their manufacturing capabilities in a meaningful way. Using automated storage and retrieval systems (ASRS), manufacturing operations can consolidate their warehousing footprint, making space for added manufacturing capabilities while increasing labor productivity.
Vertical Lift Modules, Vertical Buffer Modules, Vertical Carousel Modules and Horizontal Carousel Modules are automated storage and retrieval systems which consolidate inventory stored on traditional shelving into a more compact footprint. With up to 85% floor space savings, manufacturers can make room to expand production locally instead of relying on suppliers abroad.
Automated storage systems operate on the “goods to person” principle, bringing items directly to an operator at an ergonomic access opening. By eliminating walking and searching for items, productivity can be increased, and labor can be reduced by up to 2/3. Reshoring might require more labor on the manufacturing line, therefore these workers could be reassigned as needed.
Add Capacity For More Stock Inventory
Pre-COVID, to become more globally competitive, U.S. manufacturers widely adopted lean manufacturing methods that seek to manufacture goods on a just-in-time basis and eliminate waste, including wasted space and excess inventory. This led to a heavy reliance on global suppliers providing frequent and accurate deliveries at just the right time to meet manufacturing demand. As COVID made its way around the globe many of these deliveries slowed, leaving many manufactures idle.
While remaining lean is still important, the balance between JIT inventory and JIC (just in case) buffer stock is changing. It’s essential to ensure access to your materials and supplies to avoid shortages or shutdowns. Maintaining the precise amount of safety stock for your operation is critical to reducing dependency on international suppliers, decreasing transportation costs and remaining operational.
Read more: Calculating Optimal Inventory Stock Levels
Additional inventory doesn’t necessarily require more floor space. If your facility is near capacity, consider using ASRS to manage this additional buffer stock. Providing up to 85% floor space savings, ASRS is an easy way to expand inventory capacity and keep additional safety stock on hand.