Reshoring to Rise in 2013? Understanding the True Costs of Offshoring

Apr 9, 2013 12:00:00 AM

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Offshoring has been a source of economic savings for many manufacturing organizations. However, times are beginning to change and more operations would benefit by reshoring their operations.

Sure, it might initially look cheaper and give the company better returns, but as we will see, it’s not always as it seems. Let’s consider some of the ways offshoring impacts manufacturing in a negative way and how advanced discrete manufacturing with reshoring can help manufacturers gain more from their operations.

Offshoring Problems

  • Quality – Offshoring product can mean cheaper materials or less quality of work for the price, all with increased demand on getting the product to market. To me, that’s a losing battle for consumers and manufacturers. With lower quality, more products won’t last as long and the cost to make enough of the product to withstand the windfall will actually go up. For those looking to reshore their manufacturing operations, it can mean higher quality materials and workmanship. This is where advanced discrete manufacturing will offset the need and bring more organization to higher quality products that last longer and bring down the overall costs of ownership.

  • Costs – The initial cost of offshoring might look like a win for business, but after a while, it will surely increase. How might that happen? Well, with communication challenges, many businesses have needed to send over personnel to manage operations – that’s a cost in itself. Another increasing cost is the offshoring government’s economy. With a better economy, they want a bigger piece and will increase costs to manufacture product in that country. In other words, the total cost of ownership offshore product is going up, compared to the alternative. For a better option, again, reshoring will bring in next to the same costs. However, with advanced discrete manufacturing, we will see higher quality, better management of resources and some savings as other countries ask for more of the pie.

  • Jobs – This is one of the biggest hits when it comes to offshoring. More and more jobs are lost in the US with offshoring, but that’s just the beginning. This creates a trickle effect on other businesses that rely on those manufacturers, as customers and even small businesses can’t stay open due to no demand. Again, with reshoring, we see an uptake of jobs for manufacturing and that moves into more resources going into the economy to stimulate other buying.

Many manufacturing operations are keeping their eye on offshoring and what it actually costs their business. For now, reshoring with advanced discrete manufacturing principles makes more sense on quality, costs and jobs for those trying to move product to production.

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About Author
Luciano Cunha

Luciano Cunha

Chief Executive Officer (CEO) For Luciano, being responsible for To-Increase’s global sales and marketing means unleashing the company’s insight, innovation, and creativity to tell our story and help customers achieve their goals. On the road much of the time, he travels the world to meet with customers, understand their challenges and ambitions, and find the most effective ways to help them advance. Luciano develops and mentors our marketing and sales team, and creates strategies to help the To-Increase worldwide partner channel thrive and grow.
Making Customer Needs the Main Business Driver Luciano and his team have daily conversations with the To-Increase research and development organization to bring customers’ requirements and concerns into the road maps and design of our solutions. Luciano brings his insight to the marketing group to make sure the company’s communications resonate with customers and speak directly to their experience.
“I’m awed by customers’ innovative spirit in taking business management technology past its limits and by their generosity in letting us participate and empower them. I hope to transform our organization to become even more customer-centric than we are today. That means making more resources available to spend productive time with both our customers and partners, so we can ensure that we place into customer businesses effective solutions that fit the evolutionary stage of their operation and the way their people and processes work.”
Empowering a Global Channel
Because To-Increase only sells through partners, readying the channel to be successful in helping customers is a business-critical effort. Luciano aims to meet partners where their interests are. Partners who consider the relationship with To-Increase strategic can rely on our industry specialists to work with them as they plan their growth and serve customers. If partners prefer a less collaborative relationship, they still receive the rich To-Increase expertise and resources to ensure they win the business, perform a successful deployment, and retain a satisfied customer. In working with partners and their customers, Luciano brings to bear his experience of many years of creating successful, customer-focused business development and marketing strategies in many of the world’s countries and regions.
Enabling Customer Success in Challenging Business Environments
Looking into the near future, Luciano expects that customers will continue to expect To-Increase to help them make business sense of unfolding trends and technologies. For example, the internet of things (IoT) will thoroughly revolutionize manufacturing, engineering, and supply chains. Big data will be meaningful and valuable when decision-makers can use technology solutions to transform it into actionable business intelligence that supports key roles and business processes. Mobility will help companies become digital enterprises and move business processes forward from any location, at any time. Team To-Increase harnesses innovation to help customers translate the promise of these technologies into business results.
Before his current role, Luciano for several years was one of To-Increase’s global industry directors, responsible for our industry solutions. His experience also spans more than 17 years in IT and manufacturing management roles. These positions took him into various areas at IBM Brazil, serving as product manager for several software development companies, and included working in senior management at a manufacturing organization in the U.S.
Luciano is married with two young children. Away from work, he enjoys participating in a soccer class together with his son and daughter as well as taking relaxing walks in natural environments with his family.

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