Prepared for the Pivot
The cascading financial impact of the COVID crisis continues to mount. But emerging from the economic repercussions will be a much larger and more pervasive dynamic. Businesses reflecting on the overwhelming dependence on offshore providers that was revealed in the past months will begin looking toward more stable and reliable supply chains. I believe there will be a colossal collective reshoring pivot as buyers seek out North American suppliers. At Algood we are prepared.
In March and April of this year we went through the most demanding and stressful period of production in our history. To supply casters for critical healthcare applications, we became a 24/7 operation. With lives hanging in the balance, every request was more urgent than another. Beyond allowing us to do our part in the fight against COVID, the experience provided us with valuable insights into how can achieve even greater manufacturing efficiency. It was also presented me with an eye-opening perspective on the state of the global supply chain.
For decades, producers and providers have been attracted to the incredibly low prices offered by Chinese and other off shore suppliers. Long lead times and sometimes inconsistent quality were seen as a fair trade off for the pricing, and therefore competitive advantage offered by a low-cost supply chain.
But in the past two months, attitudes seem to be shifting. There has been an awakening to just how dependent North America was on goods from China and how detrimental that is. When we needed everything from PPE to antibiotics to respirators – and yes, casters – in an instant, we realized that we didn’t have that capacity. It took emergency measures to re-configure manufacturing facilities to meet demand and even with that, it was necessary to have supplies delivered by air from China at absolutely exorbitant rates. So much for the price advantage.
The perils of using offshore suppliers is something we at Algood have been hearing about and writing about for years. To be clear, we are not motivated by politics. Rather, our opinions about the need for reshoring were and are primarily a result of what we have been hearing from our customers.
As early as December 2015, I wrote this in one of my regular blog posts, “Customers just don’t want to wait months to receive product manufactured offshore that ends up being sub-standard – even if they can save money.”
And in September of last year, after spending a number of weeks on the road visiting customers, I observed, “There are frequent delays in delivery and the product [produced offshore] received isn’t always exactly as ordered or built to the necessary standards. Companies buying casters are working on tight deadlines and tighter budgets. Goods that can’t be used or late deliveries have a cascading impact on production and sales. It’s not surprising then that customers are looking for suppliers that are manufacturing in North America.”
Now there appears to be a collective aha! moment amongst buyers and suppliers as they realize just how unstable and injurious offshore supply chains are. There is a looming large-scale pivot that in the coming months will see many companies rethinking purchasing policies and seeking out North American manufacturers.
At Algood we are ready. With our fully integrated manufacturing facility, we are able to produce standard items as well as creative caster configurations, often in less than a week. Our internal design and engineering teams ensure that superb quality is always guaranteed. Because we are in control of the manufacturing process, we can provide competitive pricing.
We understand that many of our customers are just re-emerging from lockdown and may have to confront challenging circumstances for a while. But we have great confidence in their diligence and ingenuity. They will prevail. When they are ready to confront the cold reality of their supply chain situation and pivot to North American providers, we’ll be there to help, support and to stand shoulder to shoulder with them.