Onshoring: The Role of Transparency

Savvy consumers demand to know something: Where exactly does your product originate?

In the heyday of offshoring, few of us thought of China as anything but the land of opportunity. Then reality set in. Revelations of sweatshop labor, environmental destruction, knock-off products, and quality issues raised questions about the “Made in China” stamp and put pressure on companies to take responsibility for their entire supply chain.

To further complicate matters, the hidden costs and pure complexity of dealing with suppliers in multiple countries took some by surprise. When all factors were finally taken into account, what had started out as a money-saving endeavor became a headache. In order to improve transparency, there appeared a simple solution: Pack up the operations and move home.

The experience of Sleek Audio, a Florida manufacturer of in-ear headphones, is no anomaly. After four years of manufacturing in China, the company faced a crippling set of issues. There were communications problems with the Chinese partners, shipping delays, tedious travel, rising costs, and repeated deliveries of products that did not meet the company’s quality standards. When a shipment of 10,000 units was ruined, the foreign venture came to an end, and Sleek Audio moved its manufacturing back to the United States.

Other infamous cases — labor abuses in Nike factories, suicides at one of Apple’s Chinese suppliers, and the discovery of lead in toys manufactured in China — showcased the risks American companies were taking by moving production to foreign markets.

Though they may have been able to claim ignorance of such “missteps” in the past, distance is no longer an excuse for inadequate supplier oversight. Even so, distance does make oversight that much harder. In fact, building a transparent supply chain is crucial to gaining the trust and confidence of increasingly savvy consumers.

“The big names at the end of the chain have come to realize that lowest price can mean highest risk — and highest risk can mean high total costs,” MIT’s Charles Fine wrote in a 2013 analysis. “In that sense, the rapid switching of suppliers in search of ever lower costs has become a higher risk approach to supply chain management.”

A leaner supply chain rooted in the United States comes with increased velocity, improved quality control, and reduced management support costs, because the US business culture tends to be more service-oriented than other cultures. It enables quick and timely response to changes in demand. It also eliminates the risk of disruptions to the supply chain as a result of foreign labor disputes, natural disasters, and political upheaval, and it cuts out costs associated with shipping and tariffs.

Most of all, since consumers and watchdog groups now pay close attention to the origin of products, telling people exactly where your products come from should be easy.

Do you think it is possible to maintain transparency with the supply chain stretching across multiple borders?

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