How Small Businesses Are Creating New Supply Chains

By Rich Bond

Last week, The New York Times ran a feature business article on how America’s small businesses are moving away from offshoring and looking for domestic sourcing and production.

(Weary of Snarls, Small Businesses Build Their Own Supply Chains)

For years, countless companies moved their production overseas to reduce costs. In many cases, this proved to be a false economy, due in part to supply chain interruptions. One particular client company ended up exiting their household appliance business at least in part due to offshoring missteps.

My experience over 40+ years is that cost is less important than value. Successful companies sell products with a strong value proposition. And a study by Deloitte shows that price is twice as powerful a profit driver as variable cost.

I think the companies profiled in the article are making the right moves. It often makes sense to produce locally, particularly if you can provide better service. To manage the change to domestic supply chains and to doing your own manufacturing, you need a strong finance person who understands the whole business and works with you, the owner, as a partner – not just as a bookkeeper or cost cutter.

 

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