Is reshoring a viable option for U.S. manufacturers? A review of fresh data from SYSPRO
Recently, SYSPRO did something few ERP vendors do: original research. Some of their pandemic-impact results aren’t surprising but some (like in manufacturing) are definitely impactful. The company also announced a new cloud version of their solution, too. Here’s the update and a look ahead for 2021.
A few weeks ago, SYSPRO provided an analyst briefing. Coincidental with a new release and cloud solution announcements, SYSPRO also shared results from a study they recently completed.
SYSPRO is a well-established global provider of ERP software. They’ve been in business over 42 years and offer solutions in over 65 countries. They serve several verticals such as: Industrial Machinery & Equipment, Fabricated Metals, Electronics, Food & Beverage, Plastics & Rubber, Automotive Components, and, Packaging.
The shift SYSPRO saw
In its business resiliency research results, SYSPRO’s respondents reported a number of impacts triggered by the recent pandemic. These included:
- 23% reported a loss of customers
- 37% lacked appropriate planning tools
- 36% saw business continuity impacts
They also found that 46% needed insights to respond well during the pandemic and that 29% faced challenges re: availability and accessibility to (manual or on-premises) systems. As others have also noted, cloud systems shone through the pandemic while on-premises solutions were often problematic for users.
SYSPRO also probed the effect of the pandemic on certain sectors. To begin, let’s look at the manufacturing sector and how the pandemic has affected it. In August this year, I wrote:
U.S. manufacturers could not be as flexible as some of their offshore competitors. In an eye-opening piece in MIT Technology Review (see “Un-Made in America” in the latest issue), you see how many American manufacturers couldn’t spin up their old plants if those plants even still existed. The article reminds us of how much U.S. manufacturing capacity has been lost the last several decades and why this made it so difficult for firms to respond to new market needs. It’s a sobering read that lays out the enormity of our fragile value chains and manufacturing capacity.
Logistics Management has a great companion piece called Is it time to reshore manufacturing?. This paragraph sets up the piece well:
Over the past 25 years, globalization, lean manufacturing, improved inventory control, and customer service have revolutionized supply chains. And as supply chains have become global and more tightly stretched, the consequences of supply chain failure have grown exponentially.
SYSPRO’s study indicated that 42% of manufacturers will re-shore manufacturing operations. This is a big but not a surprising number as many firms got burned due to critical part shortages, closed suppliers, closed borders, etc. Sourcing halfway around the world may save money but the risks are significant. This re-calibration of supply chains will likely trigger new investments in plant, equipment AND systems.
My own clients are reporting interest in these initiatives. They want new, highly automated factories that utilize all of the newest technologies (e.g., AI and big data powered preventative maintenance solutions). Once designed, they want to connect, digitally, everything in the value chain (not just supply chain). In other words, they want a digital fingerprint to follow every step of the process from raw materials sourcing to post-customer-purchase product support. These deals are not old school ERP ‘package-ectomies‘ where one old solution is popped out and a slightly newer one is then implemented.
A reshoring or near-shoring surge could benefit many ERP vendors, not just SYSPRO. Will it happen right away? The answer is that the changes should start occurring soon for the most impacted firms and keep growing for years to come.
Additionally, the move to Industry 4.0 (aka Factory of the Future) will also drive new deal flow. This uptake driver is not necessarily a slam dunk for all ERP vendors as many vendors lack either the breadth/depth in their solutions (e.g., pre-built integrations to critical machine tools, pre-built anomaly detection tools, pre-built analytical applications, etc.) and only have a tool kit. Some ERP vendors lack the implementation partners to install these novel solutions. Wiring up machine tools and analyzing sensor data is a different animal from creating journal entries for a general ledger.
Click here to view original web page at Is reshoring a viable option for U.S. manufacturers? A review of fresh data from SYSPRO