Advances in automation, artificial intelligence and connected manufacturing systems are changing the economics of where manufacturers locate production, making it increasingly practical to operate closer to customers without sacrificing efficiency.
“For decades, decisions about manufacturing location were heavily influenced by labour availability and labour costs. While those considerations remain important, they are no longer the primary determining factor for many manufacturers,” says Rockwell Automation senior vice president and chief supply chain officer Bob Buttermore.
He says changing workforce requirements, volatile freight costs and more flexible manufacturing technologies are encouraging businesses to reconsider production locations.
“The organisations successfully producing closer to customers are not simply relocating production. They’re leveraging a new combination of workforce strategies, operational models and manufacturing technologies that make localised production more practical than ever before.”
Automation, advanced software and connected systems have transformed factory operations, reducing repetitive manual work while increasing the need for specialised knowledge and decision-making.
Buttermore says human expertise remains essential, but technology is extending what skilled workers can achieve, broadening the available talent pool and reducing some of the traditional constraints on manufacturing location.
At the same time, international supply chains are facing greater uncertainty. Historically predictable shipping costs helped justify manufacturing goods far from their intended markets, but geopolitical disruption, changing trade conditions and fluctuating oil prices have made transport costs increasingly volatile.
“Producing goods closer to customers can help manufacturers reduce exposure to transportation volatility, improve responsiveness, and better align supply with demand,” Buttermore says.
He believes the combination of these economic pressures and advances in artificial intelligence (AI), software-defined automation and robotics is making localised manufacturing increasingly viable.
AI can analyse production information to identify bottlenecks, anticipate maintenance requirements and support faster decision-making. Rather than relying on operators to manually assess large volumes of data, machine learning can identify patterns and provide information for improving production performance.
“Manufacturers have generated enormous amounts of data through painstakingly optimised ‘digital silos,’ or operations that have been digitised without connecting to the larger operation, but data alone does not improve performance.”
Buttermore says software-defined automation builds on this capability by connecting previously isolated systems across manufacturing operations, allowing businesses to adapt processes and scale production more readily.
Digital twins and simulation technologies enable manufacturers to test proposed production changes before introducing them on the factory floor, helping identify potential problems, reduce implementation risks and avoid unnecessary downtime.
The ability to plan and test digitally across an enterprise gives manufacturers greater flexibility when introducing new processes, responding to market changes or establishing production closer to customers.
Robotics is another important development. Autonomous mobile robots (AMRs) can move materials around manufacturing facilities with greater flexibility than traditional infrastructure, while independent cart technology enables more adaptable production flows.
Increasingly intelligent drives and sensors provide information needed to coordinate equipment and production processes, allowing manufacturers to manage material movement and operations more efficiently.
Buttermore says these technologies are changing the traditional relationship between production location and operating costs, giving manufacturers more options when designing their production networks.
“Localised manufacturing will not be the right strategy for every organisation, but the reasons not to pursue it are ripe for reconsideration.”
He says businesses making progress are combining workforce development with digital infrastructure and operational flexibility, rather than relying on technology alone.
“There’s a real argument to be made that leaders no longer need to choose between producing closer to their customers and operating efficiently. Modern technology allows them to pursue both.”