Summary
As U.S. manufacturers reshore operations due to global disruptions and rising offshore costs, companies like Intel and GM are investing in domestic facilities and seeking local suppliers. They prioritize data-driven selection, sustainability, and proximity. To become a supplier, businesses must align with industry standards, enhance capacity, adopt technology, gain certifications, and engage in industry networks. Government programs like the Manufacturing Extension Partnership (MEP) offer support. Despite challenges like competition and high labor costs, reshoring presents major opportunities for U.S. suppliers to secure contracts and strengthen the domestic supply chain through reliability, quality, and long-term partnerships.
As global supply chain disruptions, geopolitical tensions, tariffs, and rising offshore costs challenge manufacturers, many companies are onshoring or reshoring manufacturing to the United States. This shift, fueled by government incentives like the CHIPS Act, electric vehicle (EV) tax credits, and the need for supply chain resilience, is creating significant opportunities for U.S.-based suppliers. Companies such as Intel, General Motors (GM), and The LEGO Group (LEGO) plan to invest billions in domestic facilities, seeking local suppliers to support their operations. This article explores how these companies identify new suppliers and provides actionable steps for businesses aiming to secure a place in these revitalized US supply chains.
How Manufacturers Are Identifying New Suppliers
Onshoring companies are adopting strategic, data-driven approaches to identify and qualify suppliers in the US, prioritizing proximity, reliability, and alignment with their operational and sustainability goals. Below are the key methods they use:
1. Data-Driven Vendor Selection
Manufacturers can leverage advanced analytics and supply chain management tools to assess potential suppliers. They evaluate factors such as:
- Geographic Proximity: Suppliers located near manufacturing facilities reduce freight costs and lead times. For example, Intel’s new semiconductor plants in Arizona and Ohio prioritize suppliers in the US or North America to minimize transit times.
- Capacity and Scalability: Companies assess suppliers’ production capabilities to ensure they can meet demand. General Motors, expanding EV production in Michigan and Tennessee, seeks battery and component suppliers with proven scalability.
- Cost Competitiveness: While onshoring may increase labor costs compared to offshore options, companies use multi-vendor bidding to secure competitive pricing from local suppliers.
- Sustainability Metrics: Firms like LEGO, building a $1 billion plant in Virginia, prioritize suppliers with sustainable practices, such as low-carbon production or recyclable materials, to align with environmental goals.
2. Supplier Qualification and Vetting
To ensure quality and reliability, reshoring (and onshoring) companies implement rigorous vetting processes:
- Detailed Specifications: Suppliers must meet precise technical requirements. For instance, TSMC’s Arizona semiconductor factories require high-purity materials like silicon wafers, necessitating suppliers with advanced quality control.
- Site Visits and Audits: Companies conduct on-site evaluations to verify suppliers’ facilities, processes, and compliance with industry standards.
- Financial Stability Checks: Manufacturers assess suppliers’ financial health to ensure long-term reliability, especially for critical components.
3. Leveraging Technology for Transparency
Onshoring firms use digital tools to enhance supply chain visibility and streamline supplier identification:
- IoT and AI: Internet of Things (IoT) devices and artificial intelligence (AI) help track supplier performance in real-time. Expanding in Tennessee, Schneider Electric likely uses such tools to monitor component flows.
- Supply Chain Platforms: Companies use SAP or Oracle to manage supplier databases. These systems enable rapid identification of U.S.-based vendors with the right capabilities.
- Blockchain for Traceability: Some manufacturers use blockchain for transparency in sourcing, particularly for raw materials, verifying ethical and sustainable practices.
4. Building Long-Term Partnerships
Rather than one-off transactions, onshoring companies seek long-term supplier relationships to ensure stability:
- Collaborative Development: Hyundai, onshoring an EV plant in Georgia, may co-develop components with suppliers to ensure alignment with production needs.
- Local Ecosystem Integration: Companies look to regional trade associations or chambers of commerce to identify local suppliers, as seen with La-Z-Boy’s reshoring efforts.
5. Government and Industry Collaboration
Onshoring firms tap into government and industry resources to find suppliers:
- Incentive Programs: The US government provides databases and matchmaking services through programs like the Manufacturing Extension Partnership (MEP). These programs connect manufacturers with local suppliers.
- Industry Networks: Trade groups, such as the National Association of Manufacturers, facilitate supplier discovery through events and directories.
How SME Manufacturing Companies Qualify to Be a Supplier
For businesses aiming to become suppliers to onshoring companies, preparation is critical. The following steps outline how to position your company as a competitive candidate in the US manufacturing resurgence:
1. Understand the Manufacturer’s Needs
- Research Target Companies: Identify manufacturers onshoring to your region, such as Intel in Ohio or TSMC in Arizona. Study their supply chain requirements. Review their websites, press releases, or industry reports for insights into needed materials or components.
- Align with Industry Standards: Ensure your products meet the target industry’s technical specifications and quality standards. Certifications like ISO for automotive or semiconductor manufacturing are crucial qualifications.
2. Enhance Operational Capabilities
- Invest in Capacity: Scale production to meet potential demand. For example, a supplier working with General Motors’ EV plants should demonstrate the ability to produce components at volume.
- Adopt Technology: Implement automation, IoT, or ERP systems to improve efficiency and provide manufacturers with real-time data. Current technology should align with the digital supply chain tools used by onshoring firms. Understand that this step takes significant time and investment in compatible tech suited to your business.
- Focus on Quality Control: Establish robust quality assurance processes. These should include testing and documentation to meet stringent requirements, such as those for semiconductor materials.
3. Build a Strong Digital Presence
- Optimize Online Visibility: Your online presence (website, social media, etc.) must be professional and well-maintained. Also, have active profiles on industry platforms like ThomasNet or Supply Chain Brain. These items make it easier for manufacturers to find you.
- Showcase Capabilities: In your marketing materials, highlight your production capacity, certifications, and sustainability practices. Emphasizing low-carbon production could appeal to companies like LEGO.
- Leverage Social Media: You can build visibility by engaging with manufacturers on platforms like LinkedIn, X, and others. Sharing updates about your capabilities or industry expertise to build credibility, but no sales pitches! Go through the formal supplier qualification processes to be considered.
4. Pursue Certifications and Sustainability
- Obtain Relevant Certifications: Certifications like ISO 9001 (quality management) or ISO 14001 (environmental management) signal reliability and compliance.
- Adopt Sustainable Practices: Invest in eco-friendly processes, such as energy-efficient production or recyclable materials, to align with manufacturers’ sustainability goals.
- Document Compliance: Maintain compliance records with labor, environmental, and safety regulations to pass supplier audits.
5. Network and Build Relationships
- Join Industry Associations: Participate in groups like the National Association of Manufacturers or regional MEPs to connect with onshoring companies. These groups enable you to learn about opportunities.
- Attend Trade Shows: Events like IMTS (International Manufacturing Technology Show) provide platforms to showcase your capabilities and meet procurement teams.
- Engage Locally: Build relationships with regional economic development agencies or chambers of commerce. Working with these organizations with new manufacturing facilities, such as Georgia or Tennessee, may open doors.
6. Prepare for the Procurement Process
- Streamline Bidding: Develop clear, competitive proposals that outline your pricing, delivery timelines, and quality assurances. Be ready for multi-vendor bidding processes.
- Be Audit-Ready: Maintain organized records of financials, production processes, and compliance to pass site visits or audits.
- Offer Flexibility: Demonstrate a willingness to collaborate on product development or adjust production to meet the manufacturer’s needs, fostering long-term partnerships.
7. Leverage Government Resources
- Access MEP Services: The Manufacturing Extension Partnership offers training, supplier scouting, and certification support to help small businesses prepare for supply chain opportunities.
- Explore Incentives: Investigate state or federal grants for upgrading facilities or adopting sustainable practices, which can enhance your competitiveness.
- Use Supplier Databases: Register with government or industry supplier databases, such as those managed by the Department of Commerce, to increase visibility.
Reshoring Challenges and Opportunities
While onshoring presents significant opportunities, suppliers face challenges:
- Competition: The influx of onshoring companies has increased demand for US suppliers, leading to intense competition. Differentiating through quality, technology, or sustainability is key.
- Cost Pressures: Domestic production often involves higher labor costs than offshore alternatives, requiring suppliers to optimize efficiency to remain competitive.
- Skill Gaps: Some industries, like semiconductors, require specialized expertise. Suppliers may need to invest in workforce training to meet demand.
- Credibility and Capability: Companies seeking these new opportunities must be truthful about their capability. Overpromising can kill your business. The ability to meet delivery, quality requirements, and other metrics must be in place when and where your customer needs it. For example, the automotive industry and others have their customer’ safety in mind. Defective products and production delays have enormous consequences for your business.
However, the opportunities are substantial. Reshoring may create thousands of jobs and billions in economic activity, with small- and medium-sized enterprises (SMEs) playing a critical role. Suppliers can secure lucrative contracts and contribute to a more resilient US manufacturing ecosystem by aligning with manufacturers’ needs and leveraging available resources.
Conclusion
The resurgence of US manufacturing through reshoring and onshoring is reshaping supply chains. These are unique opportunities for businesses to become valued suppliers. Companies like Intel, GM, and LEGO seek local partners via data-driven and collaborative approaches, prioritizing proximity, quality, and sustainability. To become a supplier, businesses must invest in capabilities, certifications, and relationships while leveraging technology and government resources. With strategic preparation, US companies can drive growth, support domestic manufacturing, and build a more resilient future.
For businesses ready to take the next step, start by researching reshoring and onshoring companies in your region. Then connect with industry networks to ensure your operations are audit-ready. The time to act is now, US manufacturing is back, and suppliers are at the heart of its revival.
