Consider Otis Elevator. OE is one of many U.S. manufacturers, including GE, Whirlpool and NCR, which announced they were bringing factories back to the U.S. from China, Mexico and other countries and whose efforts did not go well.
Elevator and escalator orders were rising in 2012 as the building industry began to recover; however, Otis could not keep up. Output was well below plan in the new U.S. plant and backorders began to climb. Customers started to cancel orders. "I think we failed on both the planning and the execution side," Robert McDonough, CEO of the United Technologies unit that includes Otis, told analysts in March, according to The Wall Street Journal. The reshoring project cost Otis $60 million last year and that figure continues to climb.
So what went wrong? Otis representatives say the company failed to consider the consequences of the new location and tried to do too much at once, including a supply chain software implementation.
You can avoid making the same mistakes Otis made and successfully reshore some of your production by considering these rules:
Assign a team member to document a road map in addition to the project plan. You need to see where the project is going and how it will end.
Maintain a close connection with the project manager and keep careful watch over the project. Play the role of devil's advocate and look for failure points.
Avoid biting off more than you and your staff can chew. It's better to make steady progress in this effort than to push for a quick launch.
More than half of U.S.-based manufacturing executives at large companies report they are planning to bring production back to the U.S. from China or are actively considering it, according to a new survey by The Boston Consulting Group. Some of these companies will be successful and others will struggle and fail. Reshoring takes careful consideration, planning and execution.
Following these steps will help you avoid reshoring failure.
Rosemary Coates, President of Blue Silk Consulting, is a seasoned executive with an MBA and 25+ years of experience in Chinese Sourcing and Manufacturing, Supply Chain Management, Procurement, Manufacturing and ERP Systems Consulting. Ms. Coates' experience spans a broad range of industries including High Technology, Software, Chemicals, Health Care, Consumer Products, Industrial Products, Food Distribution, Transportation, Publishing, Retail, and Oil and Gas.
©Copyright - All Rights Reserved
DO NOT REPRODUCE WITHOUT WRITTEN PERMISSION BY AUTHOR.