Role of ERP in Manufacturing On-Shoring

By now, we have all heard of the term off-shoring; the practice of American companies relocating manufacturing jobs overseas to take advantage of low wages, missing unions, lack of regulation, and the scarcity of environmental controls.

The strategy has been by far the largest source of new profits enjoyed by big manufacturing companies for the past decade. But it has also been blamed for losses of U.S. jobs, with some estimates reaching as high as 25 million.

Then, a funny thing happened. After 30 years of falling American wages and soaring Chinese wages, it turns out that offshoring isn’t such a great deal anymore, which leaves U.S. manufacturers with an opportunity. As the U.S. – China cost discrepancy narrows (hastened by the weak dollar), an ‘on-shoring’ trend is gathering momentum.

Also, freight and logistics costs to meet shorter lead-times that customers now require have also closed the cost gap.  Many companies are shifting their operations back to the U.S. because off-shoring has hindered their ability to rapidly deliver goods, maintain low inventories, uphold competitive costs and meet demand for rapid adjustments to products.

One other factor that has enabled the on-shoring phenomenon is that companies are relying more and more on technology and automated production processes to reduce manual labor and boost productivity.  The role that technology systems play in addressing these challenges and opportunities are crucial.

During the days of off-shoring, manufacturers did not necessarily have to focus on the integration of technology systems such as MES (Manufacturing Execution Systems) and PLM (Product Lifecycle Management), as typically a contract manufacturing partner would handle this. For many domestic manufacturers looking to move operations back to the U.S., there needs to be careful consideration of how they can achieve greater efficiency through the use of their ERP.

Columbus is your missing link between engineering and shop floor.

Our customers using Microsoft Dynamics AX as their ERP have plenty of options to create the efficiencies needed. For example, extending the base functionality of Microsoft Dynamics AX and integration with relevant integrated add-on MES solutions can provide you with real-time visibility into your plant operations, enhancing agility and flexibility to respond to operational issues that can impact your business performance and financials.

The integration of add-on PLM solutions and Microsoft Dynamics AX frees you from working within a restrictive, bottom-up strategy when creating a complex BOM—which in turn enables relevant collaboration across departments. The entire team can easily share and work on product-design information while maintaining control of all product revisions. Having more feedback from production enables manufacturers to course correct any issues and continually monitor processes for overall efficiency.

The flexibility of Microsoft Dynamics AX and integration of add-on tools allows manufacturers to extend efficiency and the overall value and return on investment of their ERP system.

For jobs to return to the U.S., manufacturers need to ensure that their technology solutions support the automation and throughput efficiency necessary. If you’re interested in learning more about what an integrated end-to-end ERP solution can do for you, contact the manufacturing experts at Columbus. We can work together with you to get the most out of your technology and help enable world-class product development and execution right here in the U.S.

By Norman Carmichael, Manufacturing Practice Director at Columbus. Columbus is an award-winning Microsoft Dynamics ERP Partner, serving companies around the globe in the food, retail and manufacturing sectors.

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