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Shoring Up Supply Chain Demand by Reshoring

 Although reshoring has been a hot topic over the last several years, the conversations have become even more serious as a result of the pandemic, and the significant supply chain disruptions caused by Covid that have occurred in the past two years. Lockdowns, skyrocketing freight costs, port congestion and long lead times have caused major headaches. As a result, reshoring is one mitigation strategy that manufacturers are employing to reduce supply chain risk, especially in light of the potential for continued disruptions. For those reasons and more, many customers have begun sourcing production domestically again. D&M has been ready to help.

The situation is volatile and changing practically day to day. Right now, parts of China are still under lockdown to control the spread of Covid, a strategy that has been implemented in almost every major city as Covid cases increase. Areas covering roughly 30% of China’s GDP were affected by the outbreaks, according to Goldman Sachs Group Inc. And even while some of the lockdowns have eased recently and then have been reinstated when Covid reappears, ports have been at a virtual standstill and overall manufacturing production has been severely impacted with long lead times causing huge delays. In addition to delays, there are often quality concerns, and issues of traceability, especially in the instance of medical parts manufacturing.

Additionally, freight costs from China to the U.S. have also been volatile. According to Freightos, costs during the second week of June 2022 were at $9,585 per 40-foot container to the West Coast from East Asia. Those numbers have come down 57% from the peak of $22,173 in September 2020, but it is still up more than three-fold from $2,700 at the pandemic start.

Not only have freight costs increased, the processing and transit times to get a container out of China is currently double what it was just a few months ago. That doesn’t include the time to get it processed in the U.S. — only the time from a manufacturer’s dock in China to making a landing at a U.S. port.

Many manufacturers have historically not considered the full landed costs of offshoring their production. They have focused on direct manufacturing costs and transportation costs but have not considered end-to-end production costs and risks. Although part costs may be lower, total offshore production costs are often higher, and when supply chain risks are factored in, the costs become an order of magnitude higher.

The current situation has changed the calculus. Many domestic businesses are experiencing both the costs and the risks of manufacturing offshore. These companies are looking to reshore or near-shore operations to mitigate these issues.  We have been able to help.

Many of our customers are moving programs from overseas and only considering domestic suppliers for new programs.  If you’re looking for a new resource to help reshore your manufacturing, look to D&M.

Find out why our customers have sourced their parts right here in the U.S. since our inception 50 years ago.  Let us quote your next project and learn how we can help you bring your manufacturing stateside again.

All my best,

Chip

Doing our part during a pandemic.

Since D&M was founded in 1972, we’ve been providing tight-tolerance precision parts for the medical and other industries, including defense and automotive. In fact, we were the first U.S. custom injection molder to receive ISO-certification in 1993.

Today, as the uncertainty of COVID-19 grips the world, the supply chains for our nation’s healthcare industry and our food supply are more critical than ever. Since 2000 we have produced and shipped more than 4.8 billion medical plastic parts and 1.4 billion devices to the healthcare industry. Additionally, we manufacture parts that are used in testing for foodborne bacteria in the food processing industry. D&M will remain open and operational in order to continue to support our customers in these critical supply streams.

At the same time, we are equally committed to the health and safety of our employees. For that reason, a primary focus for our team meetings, which precede each of our three shifts daily, has been on safety measures to ensure our employees stay healthy. Those team “huddles” now occur with team members standing at least 6 feet apart. In those meetings, we continue to remind everyone of the World Health Organization’s recommendations, and, in addition, employees have shared good ideas that we have implemented, such as keeping frequently used doors within the plant propped open to avoid having to touch doorknobs or levers unnecessarily.

D&M is following all health and safety advice by WHO and CDC, and we have encouraged frequent handwashing as well as providing hand sanitizer on the manufacturing floor, social distancing, the use of gloves and keeping work areas sanitized. Employees who do not feel well are asked to stay home and we have agreed to pay their wages for up to two weeks. We do not want employees who become sick to return to work before they are well simply because they need a paycheck. If an employee tests positive for the coronavirus or comes in close contact with someone who has tested positive for the coronavirus, we are requiring that they self-quarantine for 15 days. Employees who are at home sick for three days or more will require a doctor’s note before returning to work, for everyone’s safety.

We have encouraged any employee who may be experiencing stress or feeling overwhelmed, to speak with family members or friends, and we offer an Employee Assistance Network which provides professional counseling at no cost to any employee or their family members, should they need additional emotional support during this difficult period.

These are unprecedented times. We are committed to continuing to supply our customers so that they can deliver the parts and services required to support front line medical staff and others disaffected by recent events.

Be well, stay safe, and please let us know if there’s a way we can help support your needs.

– Chip