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Mitigating Supply Chain Problems: Reshoring and Salesforce Technology

Mitigating Supply Chain Problems: Reshoring and Salesforce Technology

In the wake of an ongoing global disaster, manufacturing companies are having difficulty getting their products from factories to shelves. When the pandemic initially hit, this was expected, as factories were shut down and trade routes were closed off.

However, despite optimistic predictions for the future, supply chain issues have worsened even amid the nationwide lifting of lockdowns. Data suggests that the US is struggling more than other nations to meet pandemic-centric challenges. For companies operating in the US, the average cost of supply disruptions in 2021 alone was $228 million, $44 million dollars higher than the average cost of such disruptions worldwide.

The pre-pandemic practice of offshoring production is primarily to blame for such disruptions. The pandemic has made offshore production more challenging and costly than ever, creating financial and physical roadblocks that keep products off shelves. As such, reshoring production may give manufacturers the ability to survive post-pandemic by eliminating vulnerabilities, keeping costs low, and allowing for rapid changes in demand. 

Let’s look at some of the primary causes of these issues and how reshoring initiatives can address the post-pandemic distribution crisis.

Weak links: post-pandemic disruptions in the supply chain

While research is still being conducted into the causes of the supply chain crisis, economists and analysts tend to agree that the below factors have contributed to the problem.

Unprecedented consumer demand for at-home products. 

While industries like restaurants and tourism experienced cratering demand, others experienced sudden surges. House-bound Americans began spending more money on goods for their homes. Resultantly, manufacturers that could formerly predict their expected output began scrambling to meet unprecedented demand levels. 

Post-Covid regression of globalization.

According to the Organization for Economic and Cooperative Development, global trade fell by about 8% at the outset of the pandemic. The causes for this phenomenon are varied, but include the closing of borders to prevent the pandemic from spreadingwhich caused shipments of key goods to stop in their tracks — and heightening trade tensions.

Rising costs of shipping internationally.

According to the United Nations Conference on Trade and Development, manufacturers can expect an 11% rise in global import price levels as soon as 2023. Today, shipping a 40-pound steel container from Shanghai to South Holland costs around $10,522, a 547% increase in pricing from the average five years ago. Infrastructure shortages also contribute to rising costs and shipping delays, as inadequate capacity at ports and a limited supply of vessels and trucks hinder prompt delivery.

Reshoring: A solution for overburdened manufacturers?

While research is still being conducted into the causes of the supply chain crisis, economists and analysts tend to agree that the below factors have contributed to the problem.

One solution to many problems

Reshoring addresses all of the problems discussed above, imparting the following benefits onto newly-domestic companies:

  • Avoiding tariffs and international shipping costs. While outsourcing production used to be cheaper, pandemic-era tariffs and regulations have made non-domestic production much more expensive for manufacturers.

  • Bypassing bottlenecked trade routes. Operating out of the US gives manufacturers just-in-time manufacturing capacity, allowing you to quickly take your product from factory to shelves and avoid delays in overseas shipping caused by a lack of infrastructure. This will also address the issue of being unable to meet rapid changes in demand, positioning manufacturers to adjust production as needed with minimal delay.

  • Better quality control and streamlined processes. Domestic manufacturing processes can be more easily streamlined and managed than their offshore counterparts. Pairing reshoring initiatives with CRM software like Salesforce’s Manufacturing Cloud will empower your teams to make rapid shifts in production without sacrificing quality.

Salesforce support for reshoring initiatives

To take full advantage of the benefits of reshoring production, however, companies will need state-of-the-art CRM software. Salesforce’s Manufacturing Cloud is a tool that allows manufacturers to accurately keep track of output, predict and track demand as it changes, and refine their processes to provide customers with the products they need.

Reshoring initiatives provide manufacturers with the foundation they need to succeed in a post-pandemic world; Salesforce technology gives them the tools to build upon that foundation. Thus empowered, manufacturers can deal with Covid’s distribution challenges and pave the way to success in a post-pandemic economic landscape.

If you want to learn more about how reshoring can help resolve supply chain issues amidst ongoing tumult, check out this white paper or speak with a Salesforce implementation expert to find out how Salesforce technology can serve a vital function for your business.

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