How can America keep its lower consumer prices and win back global manufacturing leadership?
The global supply chain has taken a lot of political hits. The political focus has been on shuttered U.S. factories.
The global supply chain has been blamed for America’s shuttered factories, and lost jobs, because of the assumption that the global supply chain is advantaged by unfair trade deals.
What has been lost in the political rhetoric is how the global supply chain has delivered lower cost, higher quality products to all Americans. From Apple to Walmart, Americans are paying much less for higher quality products generated by intense price competition created through the global supply chain.
The real (non-political) question is how can America keep its lower consumer prices and win back global manufacturing leadership?
How The Global Supply Chain Is Saving You A Lot of Money
Apple and its CEO, Tim Cook, provide a world class example of how the global supply chain works. Cook joined Apple as COO with responsibility for developing reseller/supplier relationship strategies.
In this role he implemented a strategy to create intense price competition and increased efficiency. He did so by cutting Apple’s then current number of manufacturing suppliers from 100 to 24. The winning 24 manufacturing suppliers won based on price, quality and the ability to deliver product into Apple’s just in time inventory system.
Today that inventory system moves a product from the manufacturer’s location into a customer’s hand in five days. It has also made the smartphone both affordable, and necessity, to almost all Americans.
This same type of global supply chain been adopted by every company you shop with including The Home Depot, Walmart and Ford. At one time America was plagued by annual inflation that continuously pushed prices higher.
Today’s global supply chain with its intense focus on cost, efficiency and inventory management is a major reason why today’s prices are not rising.
Smart Factories Will Dominate The Global Supply Chain
An obvious question, especially if you lost your manufacturing job or your town has a shuttered manufacturing plant, is whether the global supply chain is fair to America?
There is no question government policies in the 1980’s enabled foreign manufacturers to undercut American manufacturers’ prices. Correcting that historical wrong is the political focus for returning manufacturing jobs to America.
Unfortunately, that focus will fail to achieve the scale of intended job growth unless Americans are willing to pay much more at the cash register.
The proposed border tax is actually a consumer tax. It charges consumers more at the cash register for imported goods to make higher cost American manufactured goods more price competitive. The end result is that we will pay more so that America manufacturing can be more price competitive.
The smart factory is the nail in the coffin in this consumer tax plan.
The global supply chain is massively moving into smart manufacturing. Smart manufacturing achieves lower costs and higher product quality by using artificial intelligence, smart optics, predictive software and the Internet of Things to displace manual labor with machines that learn.
For example, Foxconn is Apple’s largest manufacturing supplier. They have just released 60,000 workers at their China plants by replacing them with machines that learn.
Next- The great news for America manufacturing
About the author
Bill Roth is a disruptive tech business pioneer that led teams in launching the first hydrogen fueled Prius and in developing one of the first non-thermal utility scale solar power plants. He has applied his behavioral economics expertise to develop disruptive pricing and consumer engagement digital platforms. Visit his LinkedIn profile to learn more on how Bill is coaching clients on disruptive technology strategies that win customers and competitive advantage.