A recent study from Boston Consulting Group caught our eye here at Plex Systems. Its May 2011 announcement “Made in the USA, Again: Manufacturing Is Expected to Return to America as China’s Rising Labor Costs Erase Most Savings from Offshoring” summarizes research showing that within the next five years, the United States will experience a manufacturing renaissance as the wage gap with China shrinks and certain U.S. states become some of the cheapest locations for manufacturing in the developed world. It also notes that reinvestment during the next five years could usher in this ‘U.S. Manufacturing Renaissance’ as the U.S. becomes a low-cost country among developed nations.
While the analysis from Boston Consulting Group spotlights more competitive U.S. wages, flexible work rules and government incentives, part of the closing of the cost gap also could be attributed to process improvements now in place at many leading U.S. manufacturers.
Plex Systems has seen this first-hand over the last few years. Streamlined operations, reduced inventory costs, reduced quality issues and other improvements all contribute to a manufacturer’s efficiency and bottom line. In fact, here’s just a sample of real-life advantages Plex Online users have recently achieved, which all translate to lower cost operations:
U.S. automotive parts supplier:
- Cut inventory cost by 25-percent
- Reduced PO processing time by 50-percent
- Achieved 98-percent inventory accuracy
U.S. injection molder:
- Improved monthly material cost discrepancies by 92-percent
- Cut inventory tracking from six days per month to just hours
- Improved OEM label accuracy by over 95-percent
- Achieved 78-percent improvement of delivery performance in less than a year
- Generated over 8,000 implemented continuous improvement ideas
- Achieved $1 2 million annual savings
- Reduced waste by 30-percent
(Full case studies are available for download in the Plex Systems Resource Center.)
Key to these achievements is intelligent implementation and use of manufacturing-specific ERP systems. In each case, by tightly weaving traditional ERP with Shop Floor (MES), Quality, Supply Chain, CRM, Tooling, etc., these companies drive down costs.
The Boston Consulting Group research makes a great case that tax incentives and other factors make the U.S. manufacturing sector more competitive, but so does intelligent use of manufacturing technology.
With this approach, the enterprise gains the real-time intelligence required to make timely and effective decisions that reduce costs. And that helps the push for “Made in America, Again.”
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