Even though overseas production can sometimes result in lower manufacturing labor costs or cheaper products, companies are slowly moving away from this trend and bringing their factories back to the United States. This strategy has many benefits for companies, as it can result in greater supply chain optimization and allow a firm to have better disaster preparedness business solutions. Enterprises that move production to America no longer need to worry about unrest or disasters that could hinder their capabilities overseas and can keep a closer watch on any events that may hurt business interests.
A new study from The Hackett Group revealed that manufacturers are looking to enjoy greater cost savings and security by moving their plants back to domestic shores and that this trend could reach a "tipping point" by 2015, as American productivity rises, domestic costs drop and concerns about foreign labor costs and risks increase. While in 2011 the savings seen from outsourcing were at 30 percent, the research showed in 2013 they're at just 12 percent. If this number continues to decrease, it could become even less reasonable for businesses to shift operations overseas.
The study also showed manufacturers plan to increase investment within their supply chain processes by 3 percent this year. The funds will be used to help increase productivity and limit expenses in the long run. Only 20 percent of the money companies plan to spend will be focused on upgrading machinery or increasing capacity, indicating corporate leaders believe there are more important areas in which they can improve processes. Instead, businesses plan to invest more in finding new IT strategies, employee training that will increase efficiency and finding partners and suppliers that will help them procure, produce and transport merchandise.