Expert explains how to improve supply chain efficiency — Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

From Supply Chain Opz

Companies seeking to further improve their supply chain efficiency will have to continue fighting their old foe – variability – albeit in a set of new clothes.

One emerging way to combat demand variability is to locate (some) manufacturing closer to the customer. By reducing lead times due to shorter delivery routes, inventory and waste in the system can be reduced without sacrificing service levels. Much of the recently observed reshoring efforts fall into this category.

Highly flexible manufacturing goes a step further by moving from a Built-to-Stock to a Built-to-Order system for the most erratic demand pattern. Amazon’s printing and binding some of its demand at centers close to their customers while serving base demands from stock is one example of this approach.

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Chinese manufacturing seeks a major upgrade – through the use of robots — Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

From South China Morning Post

When Chinese officials recently announced plans to support investment in robots in China’s manufacturing industries, the reaction in some US circles was one of astonishment, if not incredulity. Much of China’s attraction as a manufacturing powerhouse, after all, has been low labour costs, so turning towards robots would seem like relinquishing a key competitive advantage. In fact, several key drivers explain why this is a very intentional and strategic move.

One key factor is that while China’s labour costs still lag behind those in other key economies, Chinese labour has become relatively expensive compared to nations such as Vietnam and Indonesia. Moreover, Chinese labour costs are increasing at a much faster rate than in the US and, while the gap is still considerable, it is narrowing at a relentless pace. China also faces a labour scarcity in its economic boom centres.

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Why it’s time to bring manufacturing back home to the U.S. — Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

MIT Sloan Senior Lecturer Thomas Roemer

From Forbes

In the last decade, we’ve lost millions of manufacturing jobs to outsourcing. According to U.S. News and World Report, there are now 5.1 million fewer American manufacturing jobs than in 2001. The lure of low wages, tax advantages, and other cost savings has made for a seemingly straightforward calculus, and manufacturer after manufacturer, supported by intricate spreadsheets, has abandoned ship, until offshoring has become the emerging mantra of the new millennium. U.S. companies that still manufactured locally have slowly become outliers.

Interestingly, this dynamic now seems to be changing, as we’re beginning to see more manufacturing in the U.S. Total output from American manufacturing relative to gross domestic product is back to pre-recession levels, with more than half a million new jobs. According to the Reshoring Initiative, 15% of this job growth results from reshoring alone. There are many reasons for this shift back to the U.S.

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