With tariff issues, new trade deals, Brexit, and now Covid-19, you might be thinking this is the time to mitigate risk by reshoring production. If you have already analyzed your situation and made the decision to restore, this blog will help to explain a few of the ways IIoT can help drive a successful reshoring effort by mitigating many of the common risks. What are some common risks associated with reshoring and how can IIoT help? Below are a few examples:
Risk: If you are looking to restore production to the U.S. you are mostly likely reshoring from a lower cost, less regulated environment to a higher cost, more heavily regulated environment. Labor rates will certainly increase, implying labor productivity must concomitantly improve to achieve cost-neutrality.
How IIoT can help: IIoT can help to offset increased costs in several different ways. Automation will be critical to reducing labor costs, but it does not stop there. Automation by definition will entail the use of expensive equipment thus increasing the cost of any unplanned downtime. Improved monitoring of your productivity-enhancing capital investments will help drive the necessary improvements in OEE required to offset increased labor rates.
For example, the IIoT solution can be set up to capture unplanned downtime with reason codes. With our IIoT solution, you will not only be able to see the data easily on your smartphone, tablet, PC, or even a big-screen tv on the plant floor, you can also easily analyze the data to drive process improvements and efficiencies.
Risk: Quality is another critical factor driving OEE. Anytime there are major changes to a production process, there is a risk that quality will suffer – and there is no greater change than moving production to a new location. You will have new employees using new equipment with their work governed by new processes, all under a new regulatory regime leading to high risk over short to intermediate timeframes.
How IIoT can help: IIoT can help to drive down the cost of quality through improved reporting. To drive down the cost of quality, you will need to pair IIoT with a robust quality system. For example, your Corrective and Preventive Actions (CAPA) and Root Cause Analysis (RCA) processes will function more efficiently and result in more effective decision-making when you use IIoT to gather the critical inputs to the process. IIoT will help to gather and sort your quality data, generating the reporting that will allow speedy resolutions and data-driven decision making.
For example, with our IIoT solution, you can easily Pareto the top 10 sources of Cost of Quality and deliver those in an easy to read format to enable your leadership to make data-driven improvements across your organization.
Risk: Your communications systems designed for a low-cost environment are unlikely to be sufficient when applied to your new high-cost environment. When labor rates are low it is often the case that it is less expensive to add people than to implement world-class tools and processes. For example, in a low-cost environment, you can afford to embed QA/QC team members in every cell. In a higher labor rate environment, you cannot afford this.
How IIoT can help: A properly designed IIoT system will deliver the information your now more expensive resources will need to do their jobs more efficiently. Point-of-use data collection will deliver real-time data to your quality team to drive CAPAs, to your engineering team to drive quick-turn ECN and deviation processes, and to your sales team to understand current lead times. IIoT will deliver critical information formatted to fit the needs of your expensive resources in a timely manner, increasing productivity throughout your organization.
A good IIoT solution can help here by providing what we call Manufacturing Insights…any dashboard in the IIoT solution emailed to anyone that requires the information on any set schedule. In fact, there is a VP of Operations using our IIoT solution who is responsible for 5 plants. He gets a Daily Production Report dashboard report emailed to him daily for all 5 plants. This enables him to keep up to date and ahead of issues even when he can’t get to his computer to view the reports in his modern web browser.
IIoT can drive improvements in availability, performance, and quality. You will recognize these as the components of OEE. Improving and monitoring OEE will be a critical component of successful reshoring efforts, enabling more effective use of expensive resources. IIoT will increase the productivity of your people, plant, and equipment and provide significant mitigation of the risks associated when you restore production.