Jeffrey Moss is CEO of Ascential Technologies, a company that delivers design, development and manufacturing solutions.
For many decades, businesses have focused their manufacturing operations in faraway production locations where labor and shipping costs are traditionally more affordable. However, recent global disruptions, including the Covid-19 pandemic and rising geopolitical conflicts, have revealed a new problem: Supply chains in certain parts of the world have been delayed or closed down entirely to deal with the troubles at hand.
As a result, companies are actively seeking alternative production models and strategies that mitigate the risks associated with supply chain delays, escalating costs, intellectual property concerns and tariffs. This includes exploring the benefits and challenges of nearshoring—a shift or augmentation of production to locations closer to a company’s home base. While many manufacturers have already invested in some level of automation, leading organizations are working hard to create a more comprehensive process automation strategy to support nearshored facilities.
Looking ahead to 2024, I suggest manufacturers recognize the power of combining nearshoring and advanced automation to improve supply chain reliability and production lifecycle transparency. This roadmap illustrates some of the most important steps and best practices you can follow to help your organization set up a successful nearshored facility.
1. Thoroughly evaluate your current manufacturing processes.
Does your organization have the expertise and necessary resources to replicate your production process in a different location, or do you rely heavily on subcontractors and on-site resources in your current locales? Before nearshoring, conduct a detailed analysis of existing manufacturing processes as a crucial first step. This step gives your team the chance to identify current inefficiencies, map out workflows and potential areas for automation, and assess the state of global workforces and operational assets.
Integrating large-scale process automation adds another layer of complexity that will require some planning and evaluation. When reviewing your current automation, identify any pain points and brainstorm how they can be corrected in your new automation framework.
From there, I’ve found it’s most advantageous to visually map out your existing processes and dependencies, highlighting current automation and gaps where new automation should be added. This diagram will serve as an important blueprint for setting up new automations that are both efficient and compliant.
2. Assemble a cross-functional team to prepare for the move.
Nearshoring can be a complex migration, as assets, people and equipment shift to a new operating model and location. To best prepare for this shift, assemble a cross-functional team with expertise in manufacturing, engineering, product development, IT, operations, quality and finance. Each member contributes different perspectives and knowledge about how a nearshored setup should function.
This team will ensure that the challenges and advantages of nearshoring are thoroughly considered from all angles, covering technical, operational and strategic aspects of a big production shift. They can also add their inputs to the automation planning diagram, ensuring useful automation is planned for all areas of the manufacturing workflow.
3. Outline the business case for increased automation and nearshoring.
Nearshoring can be a costly endeavor, so when manufacturers first look at the price tag, they may be hesitant to make the move. To make the case for your organization’s financial decision-makers, outline the business case and fully illustrate the cost-savings, new partnership opportunities and happier customers that can come from nearshoring and shorter supply chains.
It’s also important to consider the strategic advantages of nearshoring in conjunction with automation. When conducting a business feasibility study to determine what automation strategy makes sense, be sure to present your findings in a way that business leaders not only see the factors that can increase costs and operational complexities but also see the benefits of automation. Also, outline the steps you’ll take to mitigate risk if certain automation is implemented.
4. Research and evaluate automation technologies for nearshoring.
Explore automation technologies that align with both your industry needs and the logistics of operating a nearshored facility. Consider scalability, integration capabilities, cost, ease of use and any training requirements when making your decision.
In a modern manufacturing environment, look for technologies that facilitate seamless collaboration and automated workflows between nearshore manufacturing facilities and the onshore headquarters. Consider investing in robotic process automation (RPA), AI-powered automation and workflow automation platforms and services. (Disclosure: My company provides some of these solutions, as do others.)
5. Map out current and new processes with nearshoring in mind.
Similar to when you mapped out your existing manufacturing processes, it’s now time to map out new processes and how they’ll look for the nearshored facility. Designing a new manufacturing process involves considerations of scalability and proximity. It’s important to develop clear requirements, consider parallel processes, determine any necessary training or retraining initiatives, understand machine capabilities and plan for future automation initiatives.
Prioritize mapping out and creating workflows that are efficient in both nearshore and onshore locations in order to enhance adaptability and operational efficiency. Additionally, identify and visually emphasize any current holes or concerns in your plan; these may be areas where a third-party vendor can offer support.
6. Partner with technology vendors and service providers in your target nearshore markets.
To get up and running more efficiently, select partners with proven expertise in automation and nearshoring. In your selection process, review the prospective partner’s experience with navigating the complexities of nearshoring logistics, including regulatory compliance, cybersecurity management and supply chain coordination.
Ideally, they’ll have some sort of operational base in your desired location, but if not, they should demonstrate deep expertise in that particular market’s competitive advantages and potential bottlenecks.
Set your business up for success in 2024 and beyond.
Automation and nearshoring are not just strategic buzzwords; they are pivotal drivers of progress and transformation, especially in an era when supply chain and logistical variables can disrupt business operations at a moment’s notice.
Integrating these strategies thoughtfully can allow manufacturers to enhance productivity, improve product quality, shorten supply chains, reduce delivery times and achieve cost savings. Nearshoring, when combined with automation, gives businesses the ability to achieve sustainable growth and competitiveness as well as greater transparency and control over the entire manufacturing lifecycle.