Optimism Is Not a Plan

by Gray Rinehart

A friend and colleague pointed me to a good Manufacturing Leadership blog post entitled “Whatever Happened to the ‘China Price’?” with some of the latest news about the resurgence of U.S. manufacturing.

The blog post discussed “a new study of global manufacturing costs by The Boston Consulting Group” about the changing manufacturing environment. The study revealed that the U.S. has continued to gain ground in the global marketplace, and noted that “since 2004, China’s cost advantage over the U.S. has dropped from 14% to just 5%.” Many companies have “in-sourced” or “on-shored” some of their manufacturing as the cost of doing business locally has become more advantageous.

That’s good news, and I’m glad to be associated with folks who are making U.S. manufacturing stronger every day. But a recent� Industry Week post, “Disaster-Proofing Your Supply Chain: A 5-Question Checklist for Execs “, suggested that manufacturing leaders should approach such optimistic news with caution:

… as it relates to supply chain risk, the U.S. is by no means an unalloyed positive. The variety of natural disasters is more commonplace in the U.S. than in almost any other country in the world. Such threats raise significant questions for companies considering new site locations here.

(One of the most recognizable symbols of international trade: the shipping container. “Doors on Life,” by www.GlynLowe.com, from Flickr under Creative Commons.

This calls to mind Churchill: “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Churchill himself was an optimist, and every entrepreneur and business-person, no matter how dour and curmudgeonly they may come across at times, must also be more optimist than pessimist. If not — if you cannot imagine and look forward to success in whatever venture you pursue — why bother going into business at all?

Optimism, however, is not a plan. It’s one thing to envision the future with goals achieved and profits earned, and another thing to do the mundane work of plotting out how to get there and taking account of all the things that might go wrong on the way. As the “disaster-proofing” post put it,

Business leaders intent on bringing manufacturing back to the United States have the hopes of many Americans behind them, but these hopes can only be satisfied if they plan for supply chain risk here as carefully as they should anywhere else in the world.

In addition, the return of some manufacturing to the U.S. will not result in completely domestic production. If anything, the future situation is likely to prove even more complex and dynamic, with companies extending smaller-scale operations into more places not only as they seek to develop the best suppliers but as they seek to enter and capture new markets. This seems to present both a good opportunity and a significant challenge for supply chain experts, in terms of evaluating the total costs of supply, delivery, and use; assessing the risks associated with geopolitical tensions as well as routine business; and developing the kinds of mutually-beneficial agreements that contribute to long-term relationships and stability.

How about you and your company? Are you optimistic about the return of manufacturing to the U.S.? How are you planning to adapt to the changing supply chain environment?

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Other Items of Interest:

– The Future Supply Chain Workforce: Can Supply Chain Organizations Balance Their own Demand and Supply?

– Supply Chain Disruptions are Too Easily Blamed on Outside Forces

– Quick Poll: Biggest Blind Spot in Your Supply Chain?

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Gray Rinehart spent 20 years in the U.S. Air Force, during which he refurbished space launch facilities, fought rocket propellant fires, commanded the Air Force’s largest satellite tracking station, and did other interesting things. Gray spent 6 years with the North Carolina MEP Center, and has been a contributing editor for Baen Books since 2007. He is an author of fiction and nonfiction, and his web site is http://www.graymanwrites.com. Connect with Gray on LinkedIn at http://www.linkedin.com/in/grayrinehart or on Twitter at http://www.twitter.com/GrayRinehart.