Why Last Mile Manufacturing Matters
Last Mile Manufacturing (LMM) is a new Supply Chain Archtecture and Philosphy that takes into account major macro-economic changes, geo-political shifts and new business thinking to manage supply chains differently.
In a nutshell, today's technology supply chains are based on assumptions and economics that were true in the 1980s and 1990s. Many of these assumptions have been turned on their head:
- steadily increasing US wages (actually real US manufacturing wages are falling)
- infinitely cheaper foreign labor costs (actually, adjusted for exchange rates, foreign skilled wage rates are rising rapidly when compared to US wages, which are falling)
- steady exchange rates (actually the US dollar has fallen against many Asian currencies)
- cheap transportation is here to stay (actually transportation costs have increased dramatically)
- US companies would always have an IP lead on the competition and anyway, outsourcing manufacturing didn't really result in IP loss..(actually, major competition has emerged from the very countries that US OEMs outsourced manufactuing and then design to)
I could go on.....
LMM matters because it addresses these discontinuities and makes economic sense for OEMs that used to (or currently do) manufacture in Asia. LMM matters because it saves OEMs money, because it reduces the asset intensity of their business, because it protects their IP, because it reduces their risk and because it enhances customer satisfaction. Additionally, LMM addresses inherent US economic weakness (on the jobs and training front), which is why government (and many large outsourcers that sell into the US) should care about LMM.
More in my next post on how LMM works and why it is crtical for US tech companies.
Welcome!
Welcome to the first posting to the Last Mile Manufacturing Review blog!
I think the best place for me to start is to begin to make the case for Last Mile Manufacturing, before going into huge detail on how it works or how one implements it. So this first post is a bit of a summary of the "why" and the "what" -- and I'll try to keep it high level before going into detail in future posts. Here is is:
I think the best place for me to start is to begin to make the case for Last Mile Manufacturing, before going into huge detail on how it works or how one implements it. So this first post is a bit of a summary of the "why" and the "what" -- and I'll try to keep it high level before going into detail in future posts. Here is is:
It’s a well-known fact. Over the last two decades, our nation has lost millions of jobs to outsourcing. Companies that once manufactured products here have outsourced entire supply chains to Asia, taking advantage of lower labor costs, accommodative governments, and lower regulatory burdens.
But as you know, wage rates in Asia are rising dramatically, oil prices and transportation costs have skyrocketed, and overseas theft of our nation’s valuable intellectual property is rampant – in many cases, these things offset much of the old rationale to manufacture offshore.
The principles of Last Mile Manufacturing have the potential to return hundreds of thousands of jobs in the tech sector – millions of jobs across all sectors -- to the United States, by taking the “last mile” and onshoring it. Last Mile Manufacturing can improve a company’s bottom line, improve responsiveness to marketplace demands, and protect valuable I.P.
It will take all of us working in whatever way we can to make the needed changes. Many companies who have offshored production now have supply chains that are based on outdated assumptions, and need to overcome considerable inertia. Learning the details behind Last Mile Manufacturing approach and spreading the word are the first step. Getting corporate leaders, industry associations, as well as local, state, and federal leadership on board is critical. Last Mile Manufacturing is the only truly self-funding job creator, and it’s a win-win for companies and communities that get behind it.
I encourage you to learn more about Last Mile Manufacturing, here in these blog pages as well as at LastMileManufacturing.org, and to join with us in spreading the word.
Together, we can bring home those jobs for Americans.
Best regards,
Sandeep
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