We then calculate the manufacturing import ratio (MIR), which is simply the result of dividing the first number by the second. The US Reshoring Index is the year-over-year change in the MIR, expressed in basis points (1 percent change = 100 basis points)<\/p>\n A positive number indicates net reshoring-the degree by which gross domestic output exceeded imports from the 14 LCCs as compared to the preceding year. (Here is the calculation: 2018 MIR 13.058% – 2019 MIR 12.077% = 0.98 x 100 = 98)<\/p>\n In 2020 the pandemic has highlighted how disruptions at suppliers and supply chain partners can cause production holdups and shortages for the purchasing business. Many U.S. companies were unable to obtain parts from suppliers when factories in China shut down earlier in 2020. Sixty-four percent of respondents in the Thomas survey said their company had been affected by the shutdown of a nonessential business<\/p>\n Now, Manufacturing Reshoring<\/a> offers the promise of re-establishing the link between product design and manufacturing, between original equipment manufacturers and strategic supplier ecosystem.\u00a0 Reshoring is also a political topic, as it presents the prospect of bringing overseas manufacturing jobs back to the company\u2019s own country.\u00a0\u00a0 Reshoring also allows for risk mitigation in the case where there is a disruption to the global Supply Chain Management<\/a>, as experienced by most companies with Offshore Manufacturing during the COVID-19<\/a> crisis.<\/p>\n The big picture is drifting away from the centrality of labor-cost-arbitrage as a driver of location decisions. Instead it is moving towards proximity models driven by a supplier ecosystem, with additional focus on people, skills and organizational capabilities.<\/p>\n While macroeconomic data on comparative labor and factor costs may be compelling, the actual process of Reshoring is a daunting task.\u00a0Research reiterates that successful Reshoring of Manufacturing necessitates certain key considerations<\/p>\n 1. Work Force Stabilization<\/strong> –\u00a0Establishing product-assembly operations means hiring people, often in large numbers. High worker turnover is a problem on the shop floor because it injects variability and unpredictability into production schedules.<\/p>\n 2. Gaps in Skills<\/strong> –\u00a0In countries like US, due to the low efforts in technical skill development, there is a shortage of automation engineers and other specialists to support the setup of extensive new assembly operations. The skill gaps in other areas like Metalworking and Metallurgy are also acute.<\/p>\n 3. Capital-Labor Ratio<\/strong> –\u00a0While the latest automation technologies often have reduced setup or changeover times, advisably managers should not assume that we should use more robots.<\/p>\n 4. Supply Base Localization<\/strong> –\u00a0Managers in certain industries, while moving production back to a country like US are often faced with a hollowed-out supply base.<\/p>\n 5. Customer Partnerships<\/strong> –\u00a0The key premise behind reshoring is that closeness to product design, reduced order cycles and lower costs of carrying inventory in the pipeline should offset higher absolute production costs.<\/p>\n 6. Manufacturing Proximity<\/strong> –\u00a0Re-establishing close links between R&D and production offers a significant opportunity to improve.\u00a0 Having the work done in-house facilitates deeper understanding, learning and quick innovation.<\/p>\n Interested in gaining more understanding of these 6 key considerations for Manufacturing Reshoring<\/a>?\u00a0 You can learn more and download an\u00a0editable PowerPoint about Manufacturing Reshoring<\/strong>\u00a0here on the Flevy documents marketplace.<\/a><\/p>\n You can download this and hundreds of other\u00a0consulting frameworks<\/a>\u00a0and\u00a0consulting training guides<\/a>\u00a0from the\u00a0FlevyPro library<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Kearney’s 7th Annual Reshoring Index revealed a dramatic reversal of a five year trend, as domestic US manufacturing in 2019 commanded a significantly greater share versus the 14 Asian low-cost countries (LCCs), with manufacturing imports from China registering a particularly sharp decline. In 2019, imports of manufactured goods from 14 Asian LCC offshore trading partners… Manufacturing Reshoring: Have You Included These 6 Key Considerations in Your Strategy?<\/span><\/a><\/p>\n","protected":false},"author":124,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[82],"tags":[106,30,2104,388],"class_list":["post-7102","post","type-post","status-publish","format-standard","hentry","category-operations","tag-leadership","tag-manufacturing","tag-reshoring","tag-strategy-2"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/7102","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/124"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=7102"}],"version-history":[{"count":12,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/7102\/revisions"}],"predecessor-version":[{"id":7121,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/7102\/revisions\/7121"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=7102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=7102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=7102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/07\/Reshoring-Data.png\")
<\/a>The Reshoring Index compares US manufacturing gross output to import data from 14 Asian LCCs.\u00a0To gauge the the US Reshoring Index, we look at<\/p>\n\n
Future Is Gravitating Towards Proximity Models, Driven By A Supplier Ecosystem<\/strong><\/h2>\n
<\/a><\/p>\nBrief Outline<\/strong><\/h2>\n
Are you a Management Consultant?<\/strong><\/h2>\n