Made in America Can Help End Supply Chain Issues

One of the biggest problems manufacturers are dealing with is supply chain issues. For many years, manufacturers sent their manufacturing overseas or bought components that are made overseas. This was done when companies thought that they would be saving money by outsourcing that production where the wages would be lower, thereby increasing the income to the company. A lot of the production has been done in China or other Asian countries.

The Covid pandemic showed companies how at risk they were when depending on manufacturing abroad. When covid shut everything down in China, for instance, and then the docks in Long Beach, California, were shut down, that halted the supply chain in America. In addition to that, along with some additional regulations set up in California, the ships who had made it from China were left to wait in the ocean offshore. The political uncertainty surrounding Ukraine and Taiwan further complicates this picture.

Many companies are now reviewing why they sent the production offshore to begin with. Are the numbers still true for the advantage with wages from Asian companies, or are any savings offset by the costs of shipping, duties, and the unreliability of when the shipment may arrive? Has that Asian supply chain become so undependable to get product parts that it interferes with the company’s sales and their relationships with their customers?

After making this analysis, companies are now trying to find more suppliers and set up ways where the suppliers and their company can have mutual success. Companies are having the supplier company relationship rise to the level of the CEO to find ways to better nurture it. CEOs must plan better, forecast their companies needs, and communicate these needs earlier in the process better than they did before. The forecasts must be more error free to allow the suppliers the ability to plan for their own company.

Some companies are selling alongside their best suppliers by going out on joint sales calls. Other companies own the tools to make their products and let the suppliers use the tools to allow smaller suppliers to grow and be the key supplier that the company needs. Others are finding plants that can manufacture parts in America and sharing the output with other companies.

Some CEOs are looking at their businesses to see if they have other products that can be manufactured in this country so they can expand in another area of their business to keep them profitable, diminishing the area of the business where the company is dependent upon supply from China.

If the company is still looking at buying their parts or supply overseas, they may also consider Canada, Latin America, or South American countries, which will allow them to spread the risk of supplier shortages. Though not as ideal as made in America, these countries are within the same hemisphere and specialize in some types of products, so they could become good principal or secondary suppliers.

The changes that have happened in the world over the last several years have caused even the greatest companies to challenge their thought process on product lines. These new strategies may include what to expand in, how to improve relationship with suppliers, questioning whether the numbers and reasons that they went offshore to begin with make sense anymore, as well as looking for companies in the U.S., or at least in this hemisphere, who can manufacture the components or products that they sell. In addition, there are multiple ways to plan for potential shortages going forward and to make sure there are back-ups in place should they be required. It will take some time to reestablish the supply chain in the U.S., so success will belong to the inventive businesses!

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Denice Gierach

Gierach Law Firm

Denice Gierach is an attorney, CPA, Northwestern University business master's graduate, and has owned several businesses from real estate to manufacturing. She is the lead attorney at Gierach Law Firm in the Chicago area. With more than 30 years of experience, she has been a respected and sought-after resource for businesses looking to grow, sell, solve problems, and succeed long term. Her insights across business areas gives a fuller lens to business issues and solutions, and helps businesses grow and succeed with less time spent on legal issues and other time-consuming problems.

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