With all of the talk of the U.S. manufacturing sector rebounding, it's almost surprising to see stories like this one in the Wall Street Journal about one manufacturer setting up operations in the U.S. only to realize that the supply chain limitations of operating here made it impossible to make a profit. To summarize the story, a shoe manufacturing entrepreneur -- who previously held high ranking management posts in the same industry in China -- wanted to make a go of shoe production in the U.S. But because of the limited availability of everything from shoe soles to metal eyelets in the U.S. market, the business ultimately failed to make it and the owner is headed back to China to once again seek his fortune by producing in the East.
The story offers a great perspective on the importance of supply chain localization when it comes to supplier flexibility and selection. According to the story, "one thing that made the constant battles with suppliers irksome for [the owner] was knowing how much easier it was for shoemakers in Asia ... there are places in China where you have city blocks made up of nothing but makers of shoe materials ... you can buy 10,000 laces or 10 laces." Contrast that with U.S. suppliers, who, when they existed for the products the company needed, demanded larger volume runs than the manufacturer wanted to order. How ironic the manufacturing world has become, eh?
- Jason Busch