GA Manufacturing Extension Partnership (GaMEP) Georgia Tech

Reshoring Your Supply Chain: Starting Points for Small to Mid-Size Manufacturers

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Shipping Containers at a Port.

“Reshoring”, also known as onshoring, has never been a hotter buzzword, leaving many to ask what is reshoring and what could it mean for your business?

The definition of reshoring is “the practice of bringing manufacturing and services back to the U.S. from overseas”1 Reshoring as a supply chain initiative has been around for over a decade, but as ports are bottlenecked and transportation costs continue to climb, companies and customers are frustrated and beginning to see it as a more attractive option than ever before. Add in extended lead times and shortages in consumer products and you have what seems to be the foundation of a reshoring strategy.

Yet the thought of reshoring some or all of the supply chain for a small or mid-sized manufacturer who may already be struggling with limited resources can seem to be an overwhelming task. Conceptually, it makes sense. Reshoring can solve problems, mitigate risk, lower costs, provide a ‘greener’ solution, and even create jobs. Catching this vision, especially now, is easy, but putting a plan in place to achieve this goal may seem impossible.

One approach is to focus on a few key starting points to research and analyze the advantages and disadvantages of reshoring, while conserving your valuable resources and giving your team the information they need to make strategic decisions.

History

Go back to why the decision was made to move the supply chain offshore. Dust off the presentations and pull those old Excel files from the archives. Answer these questions:

  • What was it that drove this decision?
  • What has changed since the decision was made?
  • If you used current data with the same criteria, would the evaluation yield the same recommendation?
  • What have been the positive results of this move?
  • While recent challenges have magnified the disadvantages of offshoring, when was the offshore supply chain working well and why?
  • Are there reshoring disadvantages that should be evaluated?

There is a reason that reshoring wasn’t seriously considered until now, and you have to find that reason to make an informed decision.

Problem Statement and Solution

Once you understand why the supply chain went offshore in the first place, you must quantify the current problem, or problems, you are trying to solve. Reshoring cannot be a solution in search of a problem – that approach won’t be sustainable. This is where narrowing the focus to match your available resources becomes critical. Write a problem statement to help you discover:

  • Are there a handful of components that are driving the majority of your problems?
  • How will reshoring, specifically, address the problems and provide a more workable solution than the current supply chain?
  • Are there solutions other than reshoring that could also address these problems?

Focus on real, tangible issues and start small, otherwise your problem statement will become so large or general that it’s meaningless or unattainable.

Technology

Evaluate your current supply chain technology and determine how it can be leveraged to support reshoring.

The supply-chain industry has understood that it can no longer treat technology as an isolated service, i.e., as a means to an end. Technology will inevitably become the backbone of the supply-chain industry. 2

While this backbone will be critical to successful reshoring, the key to success is to keep it simple. Utilize what you have, while in parallel beginning to build a longer-term vision and supporting strategy.

Many small to mid-sized manufacturers have much of their supply-chain data in Excel files downloaded from an ERP system of some type. If that’s the case, build a visual of these siloed Excel databases and determine your starting point, then ask these questions:

  • Will the technology and data you are using to support offshore suppliers have to change in some way to provide the supply chain visibility you need for reshoring?
  • Can you leverage the suppliers’ technology and/or integrate it with yours easily?
  • What benefits would there be to implementing new technology?
  • Does your team have the bandwidth to take on a new technology implementation right now?

Analytics

Make sure you are measuring apples to apples as you evaluate costs. If your analytics have not evolved over time to keep up with global supply chain evolution, this needs to be addressed before any final recommendations regarding the solution to your current supply chain problems can be made. In this regard, evaluating these questions can help get you started:

  • How are you measuring your supply chain?
  • Are you considering all parts of the landed cost equation?
  • Are you factoring in cost predictability, possible import tariffs, carbon offset costs, or what you may have to spend to react to a late or cancelled delivery?

Take a big picture approach to evaluating costs for both onshoring and offshoring. While you can’t necessarily predict future unknown costs or disruptions, you can account for possible or likely risks and weigh them as part of the overall equation.

Management and Team

Assess your overall supply chain management and team bandwidth, strengths, and weaknesses. This is in many respects no different than any other organization-wide project that you may pursue: it’s the team on the ground that will have to make it happen and change management will likely be a significant part of the overall project.

As noted in Supply Chain Management Review: Supply chain and business leaders must model High Performing Organization (HPO) culture, not only embracing new behaviors like adaptability, emotional intelligence and diplomacy, but also abandoning leadership behaviors that reduce employee engagement, inclusion and empowerment. Leadership must anticipate the resources employees need and make them feel safe to openly discuss mistakes and lessons learned to encourage smart risk-taking and agility.3

Consequently, you will need to ask questions like:

  • What is your supply chain management organizational structure and how would it need to change with reshoring?
  • Does your team have the resources they need to establish new suppliers and ensure these suppliers’ success?
  • Is your current team environment one in which the challenges of major supply chain changes can be openly discussed, measured, and acted upon?

As you determine the role your team will play in your new supply chain ecosystem, be sure to consider potential partnerships with suppliers. Partnerships can effectively expand your own team in addition to providing a real-time link to your most critical suppliers.

 

Completing your reshoring plan will require far more work than the starting points listed above but the initiative may have substantial benefits that help your company achieve long-term success. If you are struggling with how to make the leap from vision to project, these key points can help kick-off the process and give you the information you need to start a reshoring project.

With project managers located within two hours of any manufacturing plant in Georgia, the Georgia Manufacturing Extension Partnership at Georgia Tech, can help you locate the suppliers you need to reshore, assess the ability of your organization to support a reshoring strategy, and advise you on your analytics and technology. Contact us for more information on supply chain services or help with other aspects of your business.

1www.reshorenow.org

2 “Supply Chain Trends to Watch – 2021”, www.sourcingandsupplychain.com

3 “Developing High Performance Leadership”, Supply Chain Management Review, www.scmr.com

By: Dean Hettenbach, Project Manager, Georgia Manufacturing Extension Partnership

Food Safety Auditing News

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Clipboard Image with text "Food Safety Auditing News"

October 2022

Get Ready for BRCGS Issue 9 Changes

Certification audits against Brand Reputation Compliance Global Standards (BRCGS)’s new standard will start on February 1, 2023.

These changes were derived from the most common non-conformities for Issue 8. In fact, these eight clauses counted for 30% of all non-conformances over the past few years:

  • 11.1 – Premises and equipment hygiene
  • 4.8 – Doors – both internal and external
  • 6.1 – Equipment construction and maintenance
  • 9.1.1 – Chemical control
  • 4.1 – Walls – condition and cleaning
  • 7.1 – Hazard identification
  • 15.1 – Risk assessment for safe storage of ingredients
  • 1.2 – Food Safety culture plan

Here’s a list of the Key Changes from BRCGS Issue 8 to Issue 9:

  • Product Safety Culture – Consideration of the behavior changes needed to improve culture
    • Sites shall plan to maintain and develop product safety and quality culture within the business
  • HACCP/Food Safety Plan – Latest publication of the Codex Alimentarius HACCP principles influence update to several clauses
    • The food safety plan/HACCP requirements updated with the Codex Alimentarius HACCP principles
    • Sites are advised to avoid having multiple plans with different terminology
  • Outsourced Processing – New requirements added to ensure outsourced processes are built into a site’s HACCP plan and requirements agreed in a specification
    • Statement of Intent updated to ensure clarity
    • New requirements added to ensure outsourced processes are built into a sites HACCP plan and requirements agreed in a specification
  • Root Cause Analysis
    • Clauses reviewed to ensure consistent approach
    • Better linkage to other sections for continual improvement
  • Food Defense
    • Section now specific to food defense requirements
    • Clauses mirror food fraud section, so the site can choose to consider the two topics (food defense and food fraud) together
  • Equipment – Several standards and industry guidelines updated that provide detailed recommendations for hygienic equipment. Section updated to align with current industry best practices.
    • Consideration when purchasing new equipment or equipment that is new to the site
    • New clause on installation and commissioning
    • New clauses on mobile & static equipment. Battery charging considerations.
    • Requirements for moveable equipment (when moved from one area to another or outside)
  • Animal Primary Conversion (slaughter) – New section. Specific controls are required to ensure that food remains safe, authentic, and legal during animal slaughter/dressing.
    • New section
    • The clauses within this section are closely linked to clauses within other sections of the Standard.
  • Changes to audit format options
    • Blended audit (optional) – document review can be remote, followed by a shorter, onsite visit. Only available for announced options.  Still required to have one unannounced every three years.
  • Unannounced audit – one in three audits must be unannounced. (Already introduced in 2020)

Visit BRCGS’s website for more information.

Have a customer that is asking for a third-party audit and don’t know where to start? GaMEP food-industry experts explain the process and help you prepare to satisfy this frequent customer requirement in our recent webinar, “Demystifying GFSI, SQF, and other Third Party Audits.”

If you need additional assistance getting started, GaMEP can help you prepare for third-party food safety audits by conducting a comprehensive onsite gap assessment. Please visit our Food and Beverage Industry Page or reach out to GaMEP’s Food Safety Industry Manager, Wendy White, for more information.

Driving Advanced Manufacturing in Georgia

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Man operating a large machine at an aluminum manufacturing plant.

Advanced manufacturing in Georgia is a huge deal – the sector is responsible for 10 percent of state gross domestic product (totaling nearly $62 billion in 2019), 92 percent of exports, and employs more than 380,000 people. The sector’s importance is no accident. It’s the result of — according to the Georgia Department of Economic Development’s Center of Innovation for Manufacturing — the pro-business climate in the state; a well-trained workforce; and a location and logistics network that allows companies to reach 80 percent of the United States in hours by truck, train or plane. The Port of Savannah, with its link to the rest of the world, doesn’t hurt either.

Georgia Tech contributes to this all-important economic driver in a number of ways, including through the Georgia Manufacturing Extension Partnership (GaMEP) and other programs of the Enterprise Innovation Institute, that support manufacturers through coaching, training, and on-site project implementation. These programs help to connect companies to other Georgia Tech resources including, the Advanced Manufacturing Pilot Facility (AMPF), an R&D facility that provides space for industrial, academic, and government agencies, while also serving as a teaching lab for graduate students. Funded by a $3 million gift from the Delta Air Lines Foundation, AMPF is part of the Georgia Tech Manufacturing Institute.

Learn more about how Georgia Tech contributes to the manufacturing ecosystem in the state in the recent article, “High-tech Makers,” in Georgia Trend magazine.

Contact us for information on how GaMEP can connect you with resources at Georgia Tech and partner organizations. Thinking about implementing a new technology in your facility? Visit our Technology page, to see how GaMEP can help.

Why Is There a Shortage of Baby Formula?

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Empty shelves at a grocery store during the baby formula shortage of 2022.

By now, everyone’s heard about the shortage of baby formula in the United States. It stems from the fact that over 90% of U.S. infant formula is made by only 4 companies: Abbot, Mead Johnson, Nestle, and Perrigo. But, how did this happen? There are three, primary causative factors:

  1. There has been a lot of consolidation across the food industry over the past few years, with big corporations buying-up other companies.
  2. The governmental food safety regulations for infant formula are extremely strict. Only companies with access to money and resources can produce these types of products. In addition, the FDA placed strict restrictions on imported formula, despite the fact that many countries have food safety standards that meet or exceed domestic standards. Because of this, the U.S. now manufactures 98% of our formula supply.
  3. About 50% of infant formula sales go through the federal Women, Infants, and Children (WIC) program, which equates to about 1.2 million infants. WIC contracts utilize a sole-supplier methodology, so two companies (Abbot and Mead Johnson) account for about 90% of WIC contracts in the US.

Beyond the reasons listed above, baby formula manufacturers are currently facing the same supply chain and workforce issues faced by manufacturers across the world. Interruptions in the baby formula supply chain, coupled with the fact that the FDA shut down a major producer earlier this year due to an extensive recall, created a perfect storm for the shortage.

Read more about reasons for the baby formula shortage and what actions have been taken to help alleviate the problem, in this recent article that I contributed to in the Washington Post: US safety, savings rules set stage for baby formula shortage.

What can manufacturers learn from this and what actions can be taken by companies to guard against future shortages of other products?

  • Food manufacturers can take steps to put food safety and quality first, to avoid consequences such as recalls or shutdowns. Learn more about the food safety training and implementation services provided by GaMEP at our food and beverage industry page.
  • All manufacturing companies can review their supply chain and use strategies to diversify and mitigate risk. Contact us for more information on how GaMEP can help.

By: Wendy White, GaMEP Food Industry Manager

Creative Solutions to the Labor Shortage Problem

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Manufacturing Worker monitoring a machine

The near-universal issue facing companies across Georgia right now is a shortage of people – finding and keeping good employees is a headache for companies large and small in just about every industry. The reasons are complex, involving a mix of demographics, pandemic-related changes in behavior, early retirements, and government policy, which means there is no simple fix.

In such an environment, it is crucial that companies make the most of the resources they have, devoting their employees’ skills to the most productive activities and minimizing wasted effort. However, that does not mean pushing people to burnout by asking them to work “harder” or put in longer hours. It refers instead to the thoughtful design of the process, the machinery, and the product to help your team reach its full potential.

The Process: If you’ve had any lean training in the past, you’ve probably been exposed to the Seven Wastes, attributed to Taiichi Ohno of Toyota in the 1950s. These categories of waste were designed to relentlessly root out inefficiencies so the company could match and later surpass the productivity of global competitors.

Now is the perfect time to focus on eliminating the Seven Wastes and using other lean tools to make your employees’ day-to-day experience more efficient and more enjoyable. If your team members are fixing defects, searching for materials, or waiting for information, for instance, you are squandering the time of the people you’ve worked so hard to get.

Working with employees to see and solve the problems that cause this waste is one path to maximizing output in a way that demonstrates one of the Toyota Way’s key principles, “Respect for People.” By acknowledging that the person who does the work knows the most about the work, you not only show respect to your team members, you also gain the best information available about the process you are attempting to improve.

The Machinery: The well-known test of automation has never been more relevant – if you have jobs that are Dirty, Dull, or Dangerous, you’re going to have a difficult time attracting and retaining employees in a market where better opportunities abound. Have you considered how you could use technology to improve the employee experience at your company?

When in past decades, incorporating technology or automation may have meant a multi-million-dollar robotics application, we now have many Industry 4.0 technologies that are connected, affordable, efficient, and can make the work better, safer, and more interesting for employees working alongside the machinery. The adoption of collaborative robots, asset monitoring systems, and other smart technologies, can free your team members to make more valuable and rewarding contributions to the business.

The Product: The third element to examine, which is often the most overlooked, is the design of the product itself. Techniques such as Value Engineering and Design for Manufacturability can reduce the material and labor required to produce a product.

The caution here is not to cheapen the product or to reduce the functionality or quality in the quest for savings. The idea is to take a focused look at the entire design process to find efficiencies while preserving or increasing the things customers like about your products. A structured approach to streamlining product design can yield productivity improvements throughout the production process.

GaMEP recently worked with a company to reduce the labor content of a metal structure product. After a thorough redesign using a lean product development process, the product is stronger and better-engineered, yet takes 30% less time to fabricate and weld than before.

Resources to help you use efficiency to overcome labor shortage challenges:

Efficiency is just one piece of the manufacturing labor shortage puzzle. There are also a host of other things you can do to become or remain an employer of choice in your market. However, once you find great people, remember to continue to look for ways to better use their talents through improvements in the process, the machinery, and the product.

By: Paul Todd, GaMEP Operational Excellence Group Manager