Since Covid-19 rocked the worlds supply chain, we have found it made a deeper impact on strategic supply chain thinking compared to previous disruptions. The disease has left companies rethinking their supply chain and manufacturing strategies. Due to the consequences of the virus, the global conversation has centered on reshoring versus nearshoring throughout economic marketplaces

Unsurprisingly, we discovered there is no magic answer, no single approach that works across every supply chain. As a result, supply chain managers place an emphasis on blended strategies to ensure that the economic benefits of global sourcing are not compromised.  We see strong momentum toward moving from a strategy of having a single source to a strategy of having multiple sources, which will spread the risk over multiple suppliers and locations.

Let’s briefly highlight what the processes actually are and how one chooses. 

What is reshoring?

Reshoring is a process used by businesses to bring their off-shored manufacturing and services back to their native country. The major argument for reshoring is based primarily on the notion that the total costs of manufacturing products can be reduced (avoid tariffs for one) and that a region can develop a skilled and localized workforce.

What is nearshoring?

Nearshoring involves businesses moving their services and manufacturing to other countries that are much closer to their borders. While there is still some distance between both parties, the aim is to bring the manufacturing closer to its point of use. A company based out of the US for example, could nearshore their plants to Canada or Mexico.

Which to choose?

In comparing the two processes, choosing which one is best always comes down to whichever factors a business will place as its highest priority. Nearshoring lowers overall travel costs, allows for swifter turnaround times, and minimizes issues that come with overcoming cultural barriers. Nearshoring and reshoring both help to stimulate local economies so some places will offer financial incentives for a business to keep their operations onshore.

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Rethinking Reshoring:
A Guide for 2022

If you have ever considered outsourcing all or parts of your supply chain, or simply do not have the capacity to support your growing production, please contact me, Mark Zeidler, President, to discuss your needs in more detail: email, 877.223.0605.