Rethinking Global and Local Manufacturing!

Global and Local Manufacturing

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In today’s business climate, many companies are grappling with the decision of whether to manufacture their products locally or overseas. With the global pandemic changing so much in the world, that discussion around global and local manufacturing has become even more complex.

There are pros and cons to both global and local manufacturing, but ultimately, it’s important to consider what’s best for your company and your customers by conducting an internal audit.

If you can find a way to support local industries while still meeting the needs of your customers and being highly profitable, that’s the ideal scenario.

You may have heard the saying “think global, act local.” But what does that mean for the manufacturing industry? Is it still possible to manufacture products locally, or do we need to look at global solutions? It will depend on a number of factors that influence your business, including your suppliers, your customers, and your own capabilities.

In today’s global economy, it’s important to think about how you can best serve your customers while still being profitable. For some companies, that means manufacturing products locally. But for others, it might mean looking at global solutions. 

In this blog post, we will explore the benefits of both global and local manufacturing, and consider a new model for the future of the industry.

Where are your suppliers?

One of the most important factors to consider when manufacturing products is the location of your suppliers. If you are sourcing materials or components from overseas, you want to ensure you can get the resources you need in a timely and cost effective manner. Depending on our business, this may mean selecting a manufacturing location in the same region as your suppliers.

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Count the cost

There are a few factors to consider when thinking about global or local manufacturing however the pricing must always be evaluated. Manufacturing products locally can be more expensive, due to higher labor and land costs. However, shipping products from overseas can also be costly, due to tariffs and transportation expenses. 

Standards

You should also consider the manufacturing standards and legislation in different regions. In some countries, there may be higher environmental or safety standards that you must meet. There may also be different legal requirements for labelling, packaging products and also the manufactured goods themselves. 

Often a manufactured item produced offshore may not meet the standards of the region you intend to sell the product. Metal cladding is a prime example of this, highlighted by the serious cladding fires that have occurred around the world. While many countries require non-combustible cladding, cheaper and inferior products had crept into the marketplace that led to disaster.

Quality

The quality of the manufactured goods is also critical. Manufacturing products locally can provide better quality control, as you have more direct oversight of the manufacturing process. However, global manufacturers may also have high standards and rigorous quality control procedures.

Timing

The timing of the manufactured items being dispatched and delivered is also important. Manufacturing locally can mean shorter lead times, as products do not have to travel as far to reach you. On the other hand, global manufacturing can provide a steadier supply of product, as local manufacturers may experience production shortages. 

Supply Chain issues

Manufacturing locally can provide greater control over the supply chain, as you can more easily monitor and manage supplier relationships. Global manufacturing can provide a wider variety of suppliers to choose from which can be helpful however, as we’ve seen over the last couple of years, global supply chains can easily grind to a halt. 

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Supporting local

Where you choose to manufacture your products has an impact on local economies. When you buy products that are manufactured locally, you’re supporting your community and helping to create jobs.  

Manufacturing locally can also help to create a more diverse economy. By supporting local manufacturers, you’re helping to create different types of jobs and businesses in your community. 

Regionalism

By diversifying your manufacturing options across multiple locations, you can build greater resiliency into your supply chain. 

The pandemic has taught us that we need to rethink our global and local manufacturing relationships. A new model is needed for the future, one that takes into account the needs of manufacturers, consumers, and workers. What that model looks like is yet to be determined, and may vary from company to company.

A new model for the future

The pandemic has forced many companies to re-evaluate their supply chains. For some, that has meant looking for local suppliers to replace overseas manufacturers. Others have found that they can’t completely rely on local suppliers and have had to look for ways to diversify their manufacturing locations.

So there you have it, five factors to consider when deciding whether to go local or global with your manufacturing. What is the best solution? We believe that the answer is reinventing your core business processes with a hybrid approach – one that combines global and local manufacturing to cater for the specific needs of a business, even in a crisis.

Global and Local manufacturing article and permission to publish here provided by Julie Scott. Originally written for Supply Chain Game Changer and published on June 29, 2022.
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