News, Insights and Best Practices for Manufacturing in Mexico

Offshoring strengthens the industrial ecosystem

28 Aug 2013

Category: Logistics Management, Manufacturing in Mexico

The industrial ecosystem is vast and complex, yet offshoring has become a vital aspect of the system in the past decade. As more U.S. businesses are expanding to Mexico, more are experiencing the fiscal benefits of low cost manufacturing, flexible supply chains and employing a highly skilled workforce. Industry experts are quickly starting to understand how offshoring the production process strengthens and reinforces the industrial ecosystem of U.S. manufacturers. Offshoring has become crucial to the global industry, and it may even help to answer the financial and operational concerns that many businesses are having.

The extent of offshoring US industry
According to IndustryWeek, many U.S. manufacturing experts were wary when businesses began offshoring production. Most concerns came back to one thing: how will it affect the U.S. industry sector? IndustryWeek reported the fortitude of the industrial ecosystem was a main concern for many U.S. manufacturers and industry experts. Yet as nearshoring becomes a common industry practice, not only has it earned a place in the global industry market, it has become essential to it.

A recent report from the Massachusetts Institute of Technology's Taskforce, titled "Innovation and Production," found holes in the industrial ecosystem regarding the creation and sustainment of production capabilities in the U.S. that enable innovation. According to the report, these gaps appeared after manufacturers merged with competitors or acquired smaller businesses. Local manufacturers needed to work harder to stay competitive in the U.S. industry market. However, this leaves the task of innovation in the market open for businesses to move in. Yet becoming innovative can be difficult for U.S. manufacturers if they are unable to keep their costs down and turn a profit. Offshoring has become an effective strategy to stay competitive and fill the gaps. 

Business continuity plans and healthy supply chains create a strong ecosystem
According to The Manufacturer magazine, U.S. manufacturers continue to look to align their business strategies with the future of manufacturing. With more businesses offshoring to Mexico, a strong industrial ecosystem relies on businesses having a continuity plan that allows the company to make the most out of nearshoring.

The Manufacturer suggested businesses think about managing their financial bottom line by reducing their supply chain disruptions. The supply chain ecosystem is an important factor in developing a healthy industrial ecosystem. By focusing on creating a business plan that improves the supply chain to avoid disruptions, the industrial ecosystem is able to grow. U.S. manufacturers need to understand how their business will be effected by the global market. Taking a long look at where the business could improve shows the manufacturer that offshoring is a great financial and operational option.

Offshoring allows manufacturers to maintain operations in the U.S. as well as another country. For those businesses who choose to expand to Mexico, they see the maximum benefits of offshoring the production process. Expanding production capabilities in another country allows a U.S. business to create new technology and be innovative, which benefits not only the company's bottom line but positively impacts the global industrial ecosystem. 

 

Related posts