Reshoring or… rightshoring? Why successful reshoring strategies must focus on quality…
Author : Harel Boren | Co-founder & CEO | Inspekto
01 November 2020
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The COVID-19 coronavirus pandemic has exposed the fragility of long, complex supply chains. It has also shown how reliant many US & European companies are on overseas supply of critical items (for example, PPE or ventilators), bringing back to the fore a long-debated issue: are we ready to reshore?…
This article was originally featured in the November 2020 issue of EPDT magazine [read the digital issue]. Sign up to receive your own copy each month.
Here, Harel Boren, co-founder & CEO of Inspekto, pioneer of AI-powered ‘Autonomous Machine Vision’, explains why quality is at the core of the question…
A recent survey by US B2B trade press publication, Supply Chain Dive revealed that 64% of interviewees across the manufacturing and industrial sectors believe that reshoring will be one of the most likely consequences of the COVID-19 pandemic. The crisis has highlighted the potential domino effect of disruptions in global supply chains, where one vulnerable node can impact the functionality of the whole chain.
As a consequence, trade publications have given ample coverage to what is actually a decade-old debate: should manufacturers seriously consider reshoring? While the answer is not straightforward, surveys such as Supply Chain Dive’s highlight two current trends.
The first is the diversification of supply chains, where manufacturers seek to lessen their reliance on a single source by adding more companies, distributed across different geographical areas, to their list of approved suppliers.
The other is indirect reshoring, where manufacturers decide to increase their in-house capacity, instead of reshoring an entire section of their production.
This last trend is particularly interesting, not only because of its sudden surge in popularity, but because it allows manufacturers in Europe, Asia, or America to lessen their reliance on suppliers in any of the other regions, without cutting off ties completely with their existing offshore operations. However, to work successfully, indirect reshoring must go hand in hand with a focus on quality.
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Spotlight on quality
Some of the phenomena we are witnessing in the current situation are just an exacerbation of processes that started years ago. Reshoring (or ‘near-shoring’) has been happening to some extent over the last ten years, as rising labour costs in Asia, and particularly in China, has pushed manufacturers to reconsider original offshoring policies.
Prevalence of reshoring seems to have been greater in North America, with companies such as General Motors, Ford and Boeing having brought thousands of jobs back to the US over the past decade.
But labour cost is not the only factor driving companies to reshore, whether directly or by adding in-house capabilities. The 2019 Lloyds Bank report, Business in Britain: Manufacturing, conducted for Reshoring UK, revealed that the prime reason for reshoring, cited by 71% of respondents, was to improve quality.
While labour costs certainly impact profits, Total Cost of Defect (TCoD) is also an important metric to consider. This includes wasting time and material to produce defective products, refunds following client complaints, possible lost business and reputational damage in the long run. If we consider all these factors, suddenly labour doesn’t seem so cheap, after all!
However, simply reshoring does not automatically guarantee an increase in quality. To achieve this goal, manufacturers must ensure they have thorough quality assurance (QA) processes in place, to spot defects early on and avoid the manifold consequences of poor quality.
The problem with machine vision projects
Israeli-DACH start up Inspekto, has made its Plug and Inspect vision product available for resale by automation vendors_580x280
When investing in a QA system, manufacturers hope to reduce TCoD, while maximising quality. Alas, traditional machine vision solutions available on the market obstruct their efforts. Moreover, as reshoring becomes higher priority as a result of the COVID-19 pandemic, the immediacy and costs associated with installing vision-based QA systems climb high in the priority list of many manufacturers too.
Firstly, machine vision projects cost anywhere between $20,000 to $200,000, or more. If the goal is to cut costs, this initial investment might undermine the whole reshoring project.
Secondly, traditional solutions frequently take months to design, develop, train and test. When reshoring, manufacturers hope to compensate for vulnerable supply chains right away, not in several months’ time.
Lastly, machine vision projects are commonly made up of a myriad of components, chosen and assembled ad hoc by external machine vision experts or systems integrators. Manufacturers want to consolidate control of their production lines to improve quality, but end up relying on third parties for their QA solution, thus losing control of their production processes all over again. It’s a frustrating vicious circle.
Autonomous Machine Vision
To enable manufacturers to be fully in control of their quality inspection process, in 2018, Inspekto, a German-Israeli company, introduced the first Autonomous Machine Vision system, the INSPEKTO S70.
As opposed to traditional QA solutions, the INSPEKTO S70 is an off-the-shelf product that comprises everything the industrial user needs to start inspection, hardware as well as software in a single package. It is ready to install, out of the box, allowing users to skip the costly and lengthy customisation and integration process that characterises traditional solutions.
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The installation process is designed to be extremely user-friendly and intuitive, so that any user, regardless of their technical background, can complete it hours, rather than weeks or months – without having to rely on a vision systems integrator.
Moreover, it is priced at a fraction of traditional machine vision projects, meaning that businesses of every size can now afford accurate QA, without having to resort to unreliable manual inspection because the costs of machine vision are too high.
While traditional machine vision solutions need to be trained to recognise every possible defect, the INSPEKTO S70 autonomously learns to recognise the characteristics of a good product. Once inspection begins, it will alert the user of any variation from the ‘memorised’ gold standard. As a consequence, the INSPEKTO S70 can even address products that it has never seen before, without the need for lengthy and complex training. This means that it starts delivering value to the plant right away, not after several months.
Thanks to the powerful capabilities of its three artificial intelligence (AI) engines working in tandem, the system can self-adapt to new environmental conditions, meaning that it will always take a clear image of the item being inspected, regardless of changes in lighting, without human intervention.
These characteristics naturally encourage what Inspekto calls Total QA: that is the presence of multiple QA stations to inspect items through the whole production process, not just at the end – another important component for reshoring efforts to be of successful. Over time, this allows manufacturers to see where defects happen more often, so that they can intervene appropriately to optimise the production line.
With a focus on quality, manufacturers can revive domestic production, without having to rely solely on cheaper labour force to stay ahead of the competition. Instead, they can rely on advanced manufacturing technologies such as Autonomous Machine Vision to get their factories back up to speed, stronger and with higher quality than ever before.
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