America’s offshoring debacle: Accounting for what happened

According to John Biagioni, president of Dynsico, the reason that domestic production is on the rise is quite simple: “Manufacturers are reinvesting here to more efficiently serve the world’s largest free market.”

There is a lot of truth behind that statement. Biagioni points out that unlike when companies left, they’re now measuring why they should return production. They’re taking into account the Total Cost of Ownership (TCO), and realizing the benefits outweigh the costs of offshoring. The TCO Estimator, provided by the Reshoring Initiative, has proved to be a valuable resource when assessing the supply chain. Biagioni explains that Viatran, a company of Dynisco, which is a “worldwide maker of pressure and level transmitters for oil and gas services, steel production, injection molding, die casting, and chemical production industries, is using TCO aggressively.” They currently have a “Build Where You Sell” approach. And it all boils down to the numbers.

Using this approach, Viatran is able to reduce its overall lead time to increase operating profit, which allows them to be the most responsive business in their markets. They benchmark the business process using TCO and benchmark the product creation process using Design for Manufacture and Assembly (DFMA). DFMA has aided them in simplifying everything that has a measured benefit, including TCO. When they utilize these tools, they are able to reduce part-count, and a reduced part-count means not having to chase after cheap labor.

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