OM in the News: A Soap Maker Cracks the Code to ‘Made in America’
A $7.95 bottle of Bath & Body Works (BBW) foaming hand soap used to take 3 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.
Now every step of production occurs at plants just feet from each other on the company’s dedicated “beauty park” near Columbus, Ohio. 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.
BBW persuaded companies throughout its supply chain to move to an Ohio city near its HQ
Bringing production closer to home, often called “reshoring,” 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. While competitors struggled with shortages, BBW’s suppliers on location shared raw materials and even employees. (Persistent supply-chain issues are leading to a factory building boom, with spending at its highest level in at least 20 years).
But moving production to Ohio wasn’t easy. Factories had to contend with planning officials, high labor and construction costs and even endangered bats. And BBW had to persuade its best suppliers to move. The plus for suppliers was continuing to do business with volume guarantees from BBW for a set number of years. The minus: spending millions to relocate production and buy new equipment. There was a lot of supplier resistance to overcome.
The BBW campus can be a model for other companies and communities. It has attracted an Amgen pharmaceutical plant. Intel just chose the area as the site of a $20 billion semiconductor facility. Intel said the plant would attract dozens of new local suppliers, including semiconductor equipment makers and other materials providers.
Classroom discussion questions:
1. What makes reshoring so difficult?
2. What are the advantages BBW gained in this major move?
