4 Ways Offshoring Impacts an Automotive Manufacturer’s Supply Chain

Posted by Matt Bishop on May 18, 2016 8:43:00 AM
Matt Bishop
Find me on:

Manufacturers-Supply-Chain.jpgWith nearly a quarter million manufacturing jobs reshored in the U.S. since 2010, it appears many automotive manufacturers are finding upfront offshore savings come with a heavy cost in parts shortages, production line shutdowns, product defects and transportation delays.

Using a U.S. supplier for critical-use, injection-molded automotive components lends itself to providing a skilled, trustworthy supply chain that is responsive to manufacturers’ needs in four key areas:

Parts Availability

Automotive manufacturers must have appropriate injection-molded plastic component inventories on-hand to meet orders for vehicles and replacement parts. Offshoring puts consistent production at risk because of the increased potential for logistical snags, time zone miscalculations and quality-impaired products.

Conversely, domestic vendors dramatically shorten the supply chain by removing the complications of international commerce. Defect-free plastic parts are produced faster, and are reliably placed in manufacturers’ hands when – or before – they’re needed.

Production Line Efficiencies

Perhaps the single biggest obstacle in keeping offshore production lines up and running is the communication gap. Language barriers are sometimes initially overlooked if overseas facility managers speak basic English, but miscommunication becomes evident later on when colloquialisms don’t translate to easily explained and actionable steps, or managers cannot properly review product requirement documents. The same holds true for cultural gaps, wherein the concepts of speed and timeliness often don’t align with Western standards, thereby greatly impacting line productivity.

Working with vendors in the U.S. effectively negates these risks on the production line and throughout the entire manufacturing process.

Defect-Free Products

Components that serve critical automotive functions or are intricate in design can be easily compromised without consistent oversight and quality control. Defective products are potentially hazardous and, secondarily, present costly dilemmas for the manufacturer such as: Are the parts reworked in the U.S., or returned to the country of origin? If returned, can the project absorb additional shipping cost and time? Who is responsible for product liability and litigation?

On the other hand, domestically produced automotive components remain under manufacturer control and, by extension, quality assurance. Course correction, when necessary, is efficiently accomplished because resolving product defects doesn’t open a Pandora’s box of additional issues. 

Efficient Logistics

Transoceanic shipping and varying time zones automatically increase product lead time, which is inefficient in itself without factoring in adverse weather, customs complications and other delay-inducing delivery hurdles.

Working with suppliers closer to home minimizes wait time and shipping snafus, allowing automotive manufacturers to quickly respond to customers’ changing demands. Also, domestic shipping costs are generally lower due to distance and required mode of travel, which typically offsets any overseas financial advantage.

Viewed through these lenses, the labor savings realized with offshoring doesn’t necessarily equal long-term value, and often creates significant challenges. For more information on the benefits and challenges of reshoring read our whitepaper, Reshoring: It’s Not a Myth – Part I. Get your free copy by clicking the button below.

Reshoring Whitepaper Part 1

Topics: Automotive, Supply Chain