Rethinking the Global Supply Chain

Given all that we have been through this year is it time to rethink our approach to the global supply chain? Builders and building product companies experienced supply chain disruptions from around the world. Talk with your building products suppliers. They will tell you that most of the materials they sell either come from China or are manufactured with one or more components made in China. Very few products are totally made in the United States of America. In a crisis that is a problem. Remember how hard it was to get masks, hand sanitizer and gloves? We often think some building materials are more critical than others, but any material is critical when you can’t get it. So perhaps we do need to rethink our approach to products made in the USA. The benefits include lead-time, design agility, resource efficiency and risk mitigation. Buying products made in the USA also provides jobs to our homebuyers. Jobs they need to be able to afford the homes we build. 

Products made in the USA have shorter lead-times than those manufactured half-way around the world. My first job was working in manufacturing. I worked there after high school my senior year and all through college. We made products made of steel, wire and wood. The company also sourced injection molded, vacuum formed and rotational molded plastic components from other local manufacturers. That company also had a paint line, screen printing, sewing and tool and die capabilities. They brought together a wide range of materials and made everything from store displays to truck parts. Short lead-times dropped shipped to your location. Look at the American companies who manufacturer roof tile, windows, doors, stone, brick, EWP, etc. in the USA. They can help you out when you are in a pinch and need product manufactured quickly. Need something from China quickly? If you can get it at all in a crisis it will require air freight and those 6,000 miles will not be cheap. 

Design agility – it is a lot easier to design products when you are working with a local manufacturer. You can sit around the table and utilize techniques like concurrent engineering to design new products or tweak existing products. Local manufacturers can often respond quickly with prototypes. They typically have the ability to tweak these prototypes to meet your schedule. Think of the work you may have done with a local ornamental iron metal shop or a ProDealer who provides you panels or a manufacturer who provides you trusses. You can make changes in days not months. There is something to be said about proximity. 

Resource efficiency – it takes a lot less fuel to ship products from city to city or state to state than it does to transport those same products from around the world. Less fuel equals less emissions. There is also another environmental aspect to manufacturing in the United States. We have some of the toughest environmental laws on the planet. If it is made in the USA, you have some comfort that the products were made with less impact to our environment. I remember talking with an importer who purchased oak boards from the USA, shipped it to China and then made volutes, S-turns and other stair parts with it.  Talk about resource inefficiency. Ship raw materials 6,000 miles convert it to finished goods and ship it back 6,000 miles. I have to believe we could utilize CNC machines and other technologies to manufacture more products in the USA. 

Risk mitigation – remember the Chinese drywall incident that rocked homebuilding? Builders ripped toxic drywall out of finished homes. Homeowners were relocated and lives were disrupted. What a mess that was. How about the laminate flooring that had high levels of formaldehyde or the thin wall copper pipe? Just Google Chinese manufacturer recalls, and your screen will be filled with examples. Another aspect of risk mitigation is the ability to get products during a crisis. There was a shortage of masks, hand sanitizer, gloves, face shields and other PPE? Thankfully local distillers converted manufacturing capacity and were able to ship hand sanitizer quickly. Local shops also started making masks out of cloth and American manufacturers started making everything from ventilators to face shields. There is something to be said about having manufacturing capacity in the United States. Most of the world’s prescription drugs are made in China. What happens if they decide to stop shipping prescription drugs? These are all risks that we must do a better job managing. 

So why do we use so many products from China and other countries? In many instances the products are no longer made in the USA. Can you think of a domestic decorative lighting manufacturer? I can’t. Most electronics are made overseas. If not the whole product then one or more of the components. In other instances, cost is a driving factor. Perhaps it is time that we look at how we can bridge that cost divide or at least work to get product costs within a relevant range of imported goods by utilizing technology. I think most American’s would pay a little more if they knew the product was made in the United States.

I am not suggesting that everything should be made in America, but the pendulum has swung too far toward globally sourced materials. When tariffs were added to products from China, companies started purchasing those same products from other countries. We need to do all we can to bring manufacturing back to America. I read somewhere that Japan is providing incentives for Japanese firms to relocate their manufacturing operations from China back to Japan. Perhaps we should do the same thing. We all can do our part by searching out domestic made products. Sometimes this takes longer but we need to take the time. For those of you who are manufacturers consider making more of your products or components domestically. Look for ways to incorporate robotics or other technologies to reduce labor costs. Embrace LEAN thinking to relentlessly drive waste out of your processes. Look for ways to reuse all your scrap to reduce your raw material costs. Engage every employee in your journey. Those closest to the process are the most knowledgeable about the process. They are in the best position to improve that process.

In summary, we need to do what we can to balance domestic versus globally sourced products. There are benefits to domestically made products as noted above. In a crisis we need to be able to rely on domestically produced products. We must learn from our experience and our experience this year has taught us that the globally sourced pendulum has swung way to far toward outsourcing critically needed manufacturing capacity. We also can never forget that making more products domestically provides jobs to prospective homebuyers.