Reshoring - New Balance - Who Kept Significant MFG in US - Has Thoughts

I just listened to a fascinating Podcast from Bloomberg with President and CEO of New Balance Shoes, Robert DeMartini.  He maintains a significant manufacturing presence in the US and is one of the last shoe makers to do so.  Along with Allen Edmonds, he bucked the offshoring trend and now appears to be proven right.

When asked about why he stays in the US much of his answer has to do with supply chain.  Let's break it down:

1. Through lean manufacturing he has brought the labor content in a pair of shoes to 2 minutes per shoe v. in Asia manufacturing it is 20 minutes per shoe. This "factoid" is one a lot of people do not think about when they go overseas.  Rather than try to find "cheap" labor you may be best to find efficient labor.  This is the "best cost" versus "low cost" thought process.
2. Mr. DeMartini also talks about cycle time which is one of the major downfalls of overseas manufacturing.  You can go into a New Balance store, order a custom made shoe and have it in 5 days.  Virtually impossible if it were made in China. 

This is the sign of a very balanced (no pun intended) CEO. He has thought clearly and precisely about this topic and has found a very easy way to analyze and ultimately decide to manufacture in the US.

He also discusses 3D printing (written about extensively on this blog) and the fact that they now have the capability to make one shoe at a time.  

As a side note, I found it also fascinating and refreshing that he has no intention on taking the company public as he does not want to fool with the silliness of Wall Street.  Keep an eye on this man, I think he will grow this company dramatically.

Here is a live interview with him from September:

Does Re-Shoring Mean a Return to Industrialized America?

I really like the article Kevin O'Marah wrote over at SCM World entitled: Re-shoring is a Red Herring.  He rightfully points out that while re-shoring is great for a variety of reasons we should not hold out hope for the whole scale re-industrialization along with the many jobs it brings.  The days of just graduating high school and going to work at the local plant are over even if manufacturing returns.

One of the reasons this is true was described in a Logistics viewpoints' prediction for 2013 where Adrian Gonzales identified "the robots keep coming". Also, back in February I wrote  a post titled: "Robots and Other Supply Chain Trends" about an interaction Kevin and I  had about the idea of robotics and how robotics is a key factor of what will allow re-shoring while not employing a lot of people.

Bottom line: Re-shoring is great for America, great for supply chains and great for the consumer (Lower cost, higher flexibility) but is not the dream people are making it appear relative to jobs and the middle class economy.

More Impact of 3D Printing - Nokia Gets in The Game

I have written about 3D printing many times and its impact on the transportation industry (read:  Soon a lot less will need to be transported).  Of course, this is a way away and most people I talk to aren't overly worried about it.  "Not in my lifetime" is what I hear most.  This reminds me of the discussions people had in the '80s when we said email will take over communications.  And, we all know what happened there.

Now we see Nokia is issuing standards so people can print their own covers using 3D printers.  This has massive implications.  First, a lot less product will need to be shipped.  Yes, I know these are small but soon it will be bigger and bigger product.  "Designed in California" will be printed and the item will be made on the spot and on demand. Transportation demand will decrease dramatically.

Second, it truly will mean "mass customization".  Mass customization has been a dream for a long time where people have predicted the benefits of large scale batch production coming to products which are made for a consumer of one.  In effect, this will be what 3D printing does.

Finally, it will put a lot of manufacturers out of business in total.  I essentially will make the product myself and will have no need of a "conversion" partner - i.e., the manufacturer.

The big winner in all this could be FEDEX and their acquisition of Kinkos many years ago could be a fantastic application for this.  Imagine the following the next time I want a case for my iPhone:

1. I download plans for the case I want.  I customize logos, words etc. on the case.  Perhaps I pay $1.99 for the plans for "one time use" and I get them right off the Apple store. 
2. Once completed I send them to FEDEX (like I do a document today) who routes it to the local FEDEX store (formerly Kinkos). 
3. The local FEDEX store "prints" the case for $5.00. 
4. I choose at this point whether to have FEDEX deliver it to my house through their "final mile" network or I pick it up.  

Voila!  No (or very limited raw material) inventory; customization for me specifically, made locally and ready to pick up in 1 hour.  Soon, just like we are used to "1 hour photographs" at Walgreens, we will have "1 hour manufacturing" and FEDEX may be in the best spot for this.  

(Note:  I have never seen anything saying FEDEX is planning this but I just think it makes sense.  In this very in depth and good article from 2011 entitled "3D Printing: The Future is Here" the author says "imagine a time when 3D manufacturers are as common as Kinkos offices completely ignoring the idea that for a lot of items Kinkos / Fedex office could be the manufacturer. ). 

Why You Want to Manage Your Suppliers' Social Responsibility

If there ever was an argument to manage social responsibility of your suppliers, this I think puts the argument to bed:

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