Reshoring is a pretty popular buzzword in the manufacturing world today.
It refers to the process of bringing back once-outsourced jobs to the United States, making it (unsurprisingly) the exact opposite of offshoring.
But in the newest publication of McKinsey Quarterly, McKinsey argued that it’s not reshoring or offshoring that are going to be the important terms headed into the next era of manufacturing–it’s going to be something they’re calling next-shoring.
As McKinsey notes, “a next-shoring perspective emphasizes proximity to demand and proximity to innovation.” If offshoring refers to taking manufacturing jobs and moving them overseas closer to cheap labor and energy, and reshoring refers to bringing jobs back now that labor and energy costs are evening out, next-shoring is the third installment where manufacturing jobs are kept in the U.S., but moved closer to hubs of demand and innovation.
Next-shoring is a fascinating concept, and I recommend reading through the publication when you have the time. But one of the biggest questions about next-shoring and moving factories closer to demand and innovation hubs revolves around determining exactly where those centers of innovation are. What should companies use to determine where to invest their money? If technology and consumer demand are evolving rapidly, how exactly can companies know that a location is worth investing in?
McKinsey has a few suggestions, and in all of them, “combinations of technical expertise and local domain knowledge” are essential. One thing they didn’t make note of (not that I’d expect them to) for tracking local demand and choosing locations in close proximity to innovation, however, was social media–something that I think could potentially have a lot of value in this space.
Think for a minute about a tool that could track conversations and use those conversations to draw conclusions about specific locations. A relatively new site called Sickweather.com is using social media to track illness, namely, the flu. By monitoring conversations on Twitter (anything from “I’m sick” to “I’m coming down with the flu”), Sickweather creates a live map of illness going around the country. All of which come from that of a few (thousand) tweets.
The capability is obviously there–so why not use a similar method for monitoring conversations about innovation and technology to help companies with the next-shoring process?
With that question, we get into a few different issues:
1. Whether or not there’s any actual relationship between talk on Twitter about innovation and a place actually being an innovation hub.
2.Who (or what) exactly manufacturers should be tracking when seeking out a next-shoring location.
3. If manufacturers are actually going to commit to next-shoring and continue spreading production across areas where innovation and demand are most prevalent. The latter question is less relevant to our discussion here, but points one and two get into the actual efficacy of social media as a tool to help manufacturers in this new era.
In the case of Sickweather, it’s very, very likely that talk on social media about illness is directly related to illness in that area. It’s unlikely that someone is going to log onto Twitter and proclaim that someone they know three states over has the flu (which would skew results on Sickweather’s map). As such, it’s reasonable to assume–as Sickweather does–that tweets are a good way for determining the prevalence of the flu in a given area.
But as far as innovation (or even demand) are concerned, the logic gets a little harder to follow. Innovation is such a far-reaching category that it doesn’t matter where users are.
Someone in Sidney, Nebraska talking about innovation could potentially be as influential in talks about disruptive technology and innovation as someone in Silicon Valley. What’s more, unlike the flu, you don’t need to “have” innovation in your area in order to be interested in it. Even if you’re 2,000 miles away from Cupertino, you can still be very interested in what Apple is planning for their next iPhone.
Still, I wouldn’t totally rule out social media for that reason alone. Even if you don’t need to be ill with innovation to be tweeting about it, your chance of being interested in it should go up as you get closer to areas that we could consider innovation hubs. This issue is complicated, but it doesn’t seem unreasonable to think that places where lots of people are tweeting about innovation (or more specifically, individual new technologies) would be useful for next-shoring operations.
The next issue–what manufacturers should be tracking when seeking out a next-shoring location–is equally as hazy. What exactly defines innovation in this context? Is it lots of people talking about their iPhones, or people posting lots of tech blogs, or is it people talking about parts they need made or cars they want to buy? Determining the needs and wants of manufacturers moving forward is essential to determining whether or not social media can be used as a tracking tool. IPhones or tech blogs? Sure–easy enough to track. Trying to find spots where people are tweeting about G-Code or a need for precision machined parts? Good luck.
To actually use social media as a tracking tool, you first have to know what you want to track. Broader concepts (innovation, data, futurology) are harder to track, but more specific ones (flu, Apple, reshoring) are much easier. If manufacturers can pin down a few terms that they think their target market uses a lot, then social media suddenly becomes a very viable tool in their next-shoring toolkit.
In the right hands, and combined with the right tools–more traditional methods for determining plant locations and production structuring, mainly–I think that social media could have tremendous opportunity in this next-shoring movement. The technology for tracking conversations by locations already exists, but it’s up to manufacturers themselves to determine how best to use it in this context.
Do I think that manufacturers should ditch hardcore R&D for Twitter as they enter the next-shoring phase? Absolutely not. But do I think that the ability to locate precisely where conversations about specific products and industries are taking place has immense value in an industry that desperately needs innovation in order to survive? You bet I do.
Social media may not be the key to the puzzle here, but it at least has the potential to be a very important piece.
Image Credit: McKinsey