{"id":9585,"date":"2021-01-06T04:00:08","date_gmt":"2021-01-06T04:00:08","guid":{"rendered":"https:\/\/ca.syspro.com\/blog\/is-it-time-to-re-shore\/"},"modified":"2021-03-04T14:51:22","modified_gmt":"2021-03-04T14:51:22","slug":"is-it-time-to-re-shore","status":"publish","type":"post","link":"https:\/\/ca.syspro.com\/blog\/erp-for-manufacturing\/is-it-time-to-re-shore\/","title":{"rendered":"Is it Time to Re-shore?"},"content":{"rendered":"

Are you among the Canadian business leaders who are considering moving some or all of your manufacturing activities to Canada, or back to Canada as the case maybe?<\/p>\n

For decades, the lure of manufacturing outside Canada has been strong. Mexico, China, and other Asian countries have made it very attractive financially. Manufacturers could get up and running relatively quickly and reap ongoing cost savings through low taxes and inexpensive labor. Shipping was economical and efficient. Overall, it was easy and profitable to manufacture offshore.<\/p>\n

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However, protectionism and tariffs have been increasing in recent years. The importance of social and environmental sustainability has grown. The cost of manufacturing in China and other countries has gone up. Shipping costs have been rising.<\/p>\n

And then the pandemic hit.<\/p>\n

This unexpected event has forced manufacturers to scramble to try and maintain business continuity. It has caused company leaders to take a hard look at their supply chains and exposed the risks associated with offshoring.<\/p>\n

At this point, some company leaders are increasingly seeing how \u2018re-shoring\u2019 \u2013 bringing your manufacturing back to Canada \u2013 may make sense. Right now, the lure of being more self-reliant, of having a tighter supply chain, and more certainty in filling orders are strong.<\/p>\n

But what does re-shoring really take? Recently, I hosted a panel discussion<\/a> <\/strong>with several business leaders to explore the vulnerabilities that the pandemic has exposed, the risks associated with off-shore manufacturing, and how re-shoring can work.<\/strong><\/a><\/p>\n

Insights from the pandemic\u2019s impact<\/strong><\/h2>\n

The pandemic has exposed many levels of vulnerability in our manufacturing and distribution sectors.<\/p>\n

Orders went unfilled (a whopping $92.5 billion in Canada in July, explained Jean-Pierre Giroux, President at EMC Canada) because of labor issues related to infection prevention, but also because of global supply chain issues.<\/p>\n

And although there has been a large amount of recovery, companies are still struggling with raw materials restrictions in China, India, the US, and other locations. In addition, if suppliers must be replaced, \u201cthere is a cost to this transition,\u201d Giroux explains.<\/p>\n

For Sure Shot Solutions, lead times for raw materials have been the biggest supply chain problem and vulnerability of the pandemic. \u201cSuppliers that have historically been reliable, suddenly their lead times are all over the place,\u201d says Sure Shot Director of Supply Chain Julie Briand. \u201cWe couldn\u2019t really depend on the system as much as we could in the past.\u201d<\/p>\n

The real and potential costs of offshoring<\/strong><\/h2>\n

Supply chain vulnerabilities aside, offshoring also presents various cost implications, some of them often overlooked or unaccounted for. And these costs are increasing.<\/p>\n

Offshoring obviously comes with added costs for logistics, duties, and taxes\/tariffs. The complexity in navigating legal and governmental issues in foreign countries also cuts into profits. While tariffs can rise anytime, labor issues and trade disputes can dilute margins very quickly. The increased cost of production cannot always be passed on to customers, in order to keep prices competitive.<\/p>\n

A supply chain is only as strong as its weakest link \u2013 and more companies are evaluating whether the entire concept of off-shoring is a weakness too strong to ignore.<\/p>\n

Important considerations before reshoring<\/strong><\/h2>\n

If you\u2019ve decided it\u2019s wiser to avoid the risks of a complex overseas supply chain \u2013 and it makes sense to manufacture in Canada \u2013 what factors do you need to think about?<\/p>\n