I found this article at the Wall Street Journal by Austen Hufford, about Bath & Body Works’s (not to be confused with the moribund retailer Bed, Bath, and Beyond) approach to shortening its supply chains very interesting:
NEW ALBANY, Ohio—A $7.95 bottle of Bath & Body Works foaming hand soap used to take three months to put together. The pieces had to travel more than 13,000 miles from China, Canada and Virginia to the company’s Ohio distribution center.
Bath & Body Works decided it needed to get new products to market more quickly. The result was a production initiative with little parallel in corporate America.
Now every step of production occurs at plants just feet from each other on the company’s dedicated “beauty park†on the outskirts of Columbus. One factory makes the foaming pump and mechanism. Another makes the bottle itself, a third makes the label, a fourth makes the soap, fills the bottle, attaches the label and screws on the top. A fifth packages it. Getting a bottle to distribution is down to 21 days and a few miles. A majority of Bath & Body Works products, which are sold in its own stores, are made on site.
The effort, which started in 2008, required a lot of negotiation with sometimes skeptical suppliers. The campus includes 10 manufacturers and millions of square feet of production and warehouse spaces, with 5,000 employees working there during peak production. Bath & Body Works had sales of $7.56 billion last year, increasing annual revenue by more than $2 billion since 2019.
“I look at BBW as a composer and a conductor of a symphony,†said Bath & Body Works supply-chain executive Susanna Zhu.
Bringing production closer to home has become a priority for many companies. Disruptions from Covid-19, severe weather, trade wars, geopolitical tensions and stuck ships left consumers without the couches and hot tubs they wanted. The Biden administration is spending hundreds of billions of dollars aimed at boosting the domestic presence of industries deemed strategic, including electric cars, batteries and semiconductors.
You might find BBW’s description of their “Beauty Park” interesting, too. Although the company emphasizes supply chain risk mitigation as a primary motivation for the park, it has other implications as well including making a customization, a key aspect of modern retailing, more practical. It also has environmental implications.
From a business organization standpoint note that the “Beauty Park” doesn’t consist of plants wholly owned by BBW but is a group of independent companies sharing facilities on the same campus. As Ms. Zhu notes, it’s like conducting a symphony.
Wasn’t this Henry Ford’s goal? To have a completely vertically integrated company from iron ore in Mesabi to coal in WV to rubber plantations in Brazil to car assembly in Detroit?
Construction in the manufacturing sector too a big jump last year, about 76%.
https://asiatimes.com/2023/07/us-reindustrialization-raises-questions-abound/
Seriously, steve?
Yes, construction of manufacturing plants is up. But most are white elephants. And very few in the icky industries, where it all starts. The US policy is incoherent, except for one guiding principle:
US consumers need cheap goods because taxation and inflation diminishes their purchasing power. And the workers in sectors that are losers be damned. People of your ilk don’t give a damn about US Average Joe workers.
Not one whit.
“US consumers need cheap goods “
Retailers need cheap goods, and American environmental regulations, work comp, minimum wage, OSHA regulations, NIMBY, plus litigation costs make American manufacturers uncompetitive.
Considering the value we extract from China’s teeming masses, maybe a little ass kissing is not too high a price to pay.
Although I agree with that list I think there’s more to it and it’s not to our credit. I think that American managers want to absolutely minimize capital investment. If they could avoid U. S.-based employees, manufacturing, etc. entirely, they would.