The executive suite of America’s Fortune 500 companies needs convincing that reshoring is a sound business decision. There’s a growing consensus that the reshoring effort is more than a slogan—it’s a policy decision. As an experienced manufacturing buyer or engineer, this blog will help you open a dialogue that communicates reshoring’s value proposition and the resources you need to prove your point in calculating the total cost-effectiveness.
The Value of Reshoring
You need to make the argument that reshoring is a local solution—reducing the total cost of ownership and let go of long-held beliefs that offshore manufacturing is cheaper. Here are two excellent conversation starters:
Favorable Business Conditions
Reshoring reduces lead time, upgrades the skilled manufacturing workforce, lowers inventory levels and maintains our sector’s broad industrial capabilities required for national defense. Product development time and costs are drastically reduced, and suppliers improve communication and quality.
Reshoring fosters local tax incentives, helps to balance budget and trade deficits, and reduces unemployment and income inequality. And the benefits of reshoring go much further, as supply chain reinforcement can lift entire regions, providing a downstream economic boost that ripples through thousands of local communities. Manufacturing has the highest multiplier effect of any industry. For every dollar spent, $2.74 is returned to the local economy which supports your family and neighbors’ livelihoods.
When it comes to recognizing the value of reshoring, Corporate America is now far beyond the “wake-up call” stage. In fact, they’ve hit the snooze button for far too long. To bypass the traditional roundtable discussions, here are a few resources you can use to calculate the total cost benefits of reshoring.
How to Calculate the Total Cost Benefits of Reshoring
The Reshoring Initiative’s Total Cost of Ownership (TCO) Estimator
This is a free online tool from the ReshoreNow.org site, which helps companies realize the value of reshoring as it pertains to multiple business factors. You must create a free account to begin, and the TCO Estimator tutorial will guide you through the process. If your job role includes supply chain management, accounting, manufacturing, industrial engineering, strategic planning or line management, this estimating exercise is for you.
U.S. Department of Commerce’s ACE Tool
This is a comprehensive list of resources to help the management of U.S. companies understand the value of reshoring. Taken from the site’s opening statement: “The Assess Costs Everywhere (ACE) tool builds upon the ongoing public- and private-sector efforts to guide businesses and communities in determining the total cost of manufacturing overseas versus in the United States and why investing in American pays off.”
Created by the University of Michigan with a grant from the Economic Development Association, here’s a site selection tool resource every company manager should bookmark: “NEXCAP provides detailed information about underutilized manufacturing sites and the communities in which they are located. Our mission is to ensure that companies seeking to locate production in the U.S. find the site or facility they need and a community in which they can grow.”
U.S. Cluster Mapping Project
Developed at the Harvard Business School’s Institute for Strategy and Competitiveness, and also funded by the EDA, this site includes publishing data records on industry clusters and regional business environments. Put to good use, this resource can guide companies in developing best practices pertaining to economic development, policy and future innovation.
With the value of reshoring spelled out, as well as the means to calculate the benefits, you have the tools to convince the C-suite that America’s proverbial horse has reached the water. It’s time to take a drink.