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The coronavirus pandemic has many manufacturers rethinking their supply chains. After enjoying years of cost-savings from offshore operations and practices such as just-in-time inventory, manufacturers are seeing their previously smooth-running production and transportation operations grind to a halt.
The mounting expense of stalled operations has spurred manufacturers to move quickly to reshore or localize production functions, including heat treatment.
Companies recognize that the risks and strategic impacts associated with offshore manufacturing simply outweigh the shrinking wage advantages found in emerging markets. 
There are no easy fixes. But there are best practices and workarounds you can implement to  successfully reshore your manufacturing to the U.S. — including your heat treatment operations.
In this article, you’ll learn what to expect and how to initiate reshoring your operations. 
You’ll find helpful discussions about:

  • Understanding why manufacturers are shortening their supply chains
  • Recognizing common challenges of reshoring or localizing heat treating operations
  • Filling knowledge gaps created by moving from one heat treatment supplier to another
  • Maximizing the opportunity presented by reshoring heat treatment operations

Learn how Paulo can help with relocating your heat treating operations

Why are manufacturers reshoring?

Manufacturers are seeing the benefits of once again producing in the United States, the world’s largest market. According to the Reshoring Initiative [], companies that reshore say their top reasons for moving back the U.S. include reduced lead time, higher product quality and consistency, the need for a skilled workforce, and the desire to strengthen the U.S. economy by creating productive jobs. 
Even as they manage their responses to the pandemic, manufacturers are looking ahead to what could be the next big disruption to global supply chains. Possibilities include border closings, tariffs, war, and shipping strikes.
To reduce the impact of these and other potential disruptions to their supply chains, many domestic manufacturers are considering or have already decided to move their operations closer to home. 

Common challenges and pitfalls

Heat treating is a critical manufacturing step that must be done correctly for parts to perform. Clearly defined specifications and scientific certainty are essential for success. Manufacturers need to understand what to expect when relocating heat treating operations and what they can do to overcome challenges. 
Here are some common areas of concern.

Materials and processes

Relocating operations changes more than the physical location of your heat treatment processes. When manufacturers relocate, they sometimes discover that their finished parts were being produced from a different material than they originally thought. Offshore partners may have substituted a different material because they may not have had access to the steel grades or specialty alloys more commonly available in the U.S. 
The same situation applies to the heat treatment specifications being used by offshore partners. Some manufacturers we’ve worked with have found that adjustments were made to the processing of their parts varying from the original specifications, sometimes as a result of the substitution of alternative materials. To further complicate matters, these adjustments may not have been documented by the former supplier.
Both, and especially a combination of, these unexpected discoveries can cause major headaches for manufacturers when they take over production. If heat treatment specifications are not exactly tailored to the parts’ material, it can lead to costly ramifications such as scrap parts, lead-time delays, and even potential recalls should the parts enter the supply chain. 

Testing practices

Overseas, testing practices often differ from those used domestically. Reasons for these differences include availability of testing equipment and cultural preferences regarding testing methodology and measurement. For example, manufacturers in Japan commonly read case depth from the core of the part outward, where in the U.S., case depth is read starting at the surface of the part and progressing toward the core. In addition, offshore suppliers may have different preferences for testing locations on your parts.
Occasionally, manufacturers who have relocated also find that documentation of testing procedures may not meet their expectations. No matter the discrepancy, establishing proper testing methods once domestic production begins can consume valuable time and resources, impacting the ability to deliver parts on time with scientific certainty in the results.

Institutional knowledge

You can expect to lose some level of detail in records or procedures in the transmission of specifications and procedures. Think of the recipe for your grandma’s cheesecake. Who knew she added another half teaspoon of vanilla? Some production steps may have been added, altered, or passed over by teams overseas. 
For example, your previous partner may have noticed that a slight increase in time in the vacuum furnace yielded better hardness results, but may not have taken the steps to have the heat treating specifications officially updated to reflect the change—instead, the teams processing your parts communicated it by word of mouth. This lack of documentation (also oftentimes coupled with a language barrier) can leave this important information lost in the relocation process.
While a missing dash of vanilla won’t hurt anyone when it comes to cheesecake, in heat treatment, adjustments to time, temperature, and atmosphere chemistry (to name a few) are both business- and safety-critical.

How to fill in knowledge gaps once you’ve relocated

Reverse engineering

One of the most effective ways to uncover knowledge gaps is to reverse engineer a process—start at the end of a procedure or a completed product and work backwards.
At Paulo, our metallurgy team will use a spectrometer to determine a specific material, which may not be what you’ve been told it is or what you believe it to be. We can then determine what likely heat treatment was used by conducting tests on hardness, case depth, and microstructure. 
With the largest in-house metallurgy team of any commercial heat treater, Paulo draws on decades of experience (and process modeling tools built on that experience) when approaching reverse engineering. Our deep expertise allows us to reach accurate conclusions faster, so you can get back to producing your parts.

Familiarity with differing global practices

One of the major challenges of relocating operations is not knowing what you don’t know.
The more familiar you are with the procedures and regulations surrounding your offshore production, the more easily and more accurately you’ll be able to replicate or adapt those practices in your domestic production. 
This process is completed far more quickly — and economically — when the team managing your relocation already knows how things are done in specific foreign markets and what needs to be done to adapt them for the U.S. market. At Paulo, our team is well-versed in manufacturing and quality control practices used in places such as China, Japan, Germany, and beyond.

Leverage relocation challenges for improvement

While investigating and solving these common challenges can consume both time and financial resources, the flip side is that it presents opportunities for improvement. Here are just two examples of how manufacturers like you can convert reshoring challenges into better results.

Material selection

It may have been years or even decades since you last evaluated your choice in materials for your parts. Reshoring presents an opportunity to re-examine material options and select the particular steel grade or alloy that best fits the needs of your application. You may wind up with better quality, longer lasting, and in some cases, more cost effective parts as a result.

Specifications and testing procedures

By reshoring, your team can more easily set and enforce standards across your entire manufacturing operation, including heat treatment and part testing. By establishing appropriate standards, you’ll gain peace of mind knowing that your parts will enter the supply chain fit for service in your application.

How Paulo sets up reshoring efforts for a successful transition

The experience of Paulo’s metallurgy team lays the groundwork for a successful transition to a more localized approach. Our familiarity with operations previously conducted in places like China, Japan, and Germany provides you with an understanding of how to best collect data, answer questions and manage your reshoring efforts with greater speed and efficiency.
Our ability to help manufacturers with the transition of their heat treating is another example of Paulo’s rock-solid foundation called datagineering. Datagineering brings together the very best of people, science, data, and technology to produce unparalleled results in thermal processing. It’s a concept that captures the work of our smart operators, engineers, metallurgists, and leaders at all levels throughout our entire system.
If you’re considering localizing your manufacturing operations, or if you’ve recently reshored, Paulo can help you manage the transition. Contact a Paulo expert to get started today on converting your reshoring challenges into higher quality and better efficiency.
Learn how Paulo can help with relocating your heat treating operations

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