In the tide of globalization taking place across the last few decades, many companies prefer to opt for suppliers from around the world. After all, developing a supply chain is a strong means of building your company overseas. However, doing so has significant risks, and there are many benefits to retaining a supply chain near the USA. Learn more about why using a supply chain closer to home can benefit your company.
Protected supply chains
One of the biggest risks of supply chains is the presence of disruption and uncertainty in the international foreign policy landscape. Economic sanctions have a significant impact on the private sector, and critical products and components are one of the specific markets at risk from unstable supply chains as companies sanction the more functional industries that other markets rely on. Buying in the Americas means a simplification of the supply chain and prevention of any risks associated with international trade. However, nearshoring some of your critical components for final US assembly is also a good option.
Avoid import tariffs
Depending on the country you import your parts and supplies from, you may have an import tax rate on your components and parts. This means that your spending increases in line with the import tax rate. Many countries have a duty-free agreement with the USA, however certain objects and certain countries pay significant taxes. This means you spend more on your parts and lose out on a portion of your profits. Even when trading with friendly states, taxes are an issue. In the case of the USA’s Free Trade Agreement with Colombia, eliminating import taxes is a clear benefit.
Design standards
Having the same design standards across your parts and components is essential. For example, NIST works in the manufacturing industry in order to ensure a high quality of design and standardization is in place across the US manufacturing industry. US manufacturers have a strong level of design standards. Using ISO and IATF-certified items means that you have supplies that fit one another in all cases, freeing up employee time and increasing the level of productivity within an organization. Remaining with a standard set of design and manufacturing tools and measurements makes the entire process simpler for your company.
Reducing lead times
Functioning within a single country, and potentially within the state, has clear benefits for every stage of the supply chain. You communicate with other parties far more quickly, discussing the specifics of your order and establishing delivery dates quickly and easily. Furthermore, this reduces the bullwhip effect, so suppliers know exactly what you require without the risk of any fluctuations causing higher spending on parts and equipment.
Your company reacts far more quickly and efficiently to issues and adapts to problems in a more effective manner. Sourcing components in Canada, Mexico, and Colombia are also good options for reducing lead times. In addition to not having import tariffs and having high-quality manufacturing standards, these countries are sometimes closer to certain US regions. For example, Colombia is closer to Florida than California is to Alabama.