Last week, I had the pleasure of speaking at the Product Realization Group’s
2013 Annual Symposium, where the theme was “Go Local.” Reshoring is all
the rage with politicians and business media, and for good reason. I’m
not suggesting offshoring or outsourcing does not have value under the
right circumstances; however, I am saying that the 1990’s
decision-making process was too narrowly focused on labor
costs/short-term profit and completely missed the boat on the more
critical metrics, including customers, innovation, growth and operating
leverage.

Over the past three years, we at Excelitas Technologies
have made a significant effort to challenge the “old” thinking with a
more holistic, balanced perspective – understanding that growth and
happy customers drive sustainable economic success and benefit all
stakeholders.

While the following key points are
not novel in concept, and are based on common sense, you would be
surprised how overlooked and misunderstood they are:

Re-think “make” vs. “buy.”
What is the real value of your supplier or your LCC factory? Being
vertically integrated may have significant benefit to both you and your
customer, so challenge the old assumptions.

Put your customer first. Does that factory in Asia or EMS benefit your customer, or does it add complexity and risk with significant hidden costs?

Complexity is expensive and time-consuming.
What are the metrics you want to measure? Does it really make sense to
pay someone else’s overhead and profit margin? How about cycle time and
quality management?

What about innovation? Is
your intellectual property safe in Asia or with EMS? What about the
pace of innovation? Global development efforts (both internally and
externally) can be very time-consuming and inefficient.

Consider the human element.
Recognize that location decisions affect people where the jobs are
created and where they are lost. Maintaining compassion will ensure
support, or at least understanding, from all levels of the
organization.

Each company will have unique
circumstances that require consideration when making
manufacturing/design location decisions. However, at Excelitas
Technologies, we continue to rethink and challenge the old way of
thinking to drive growth in a long-term and sustainable way.