Reshoring Likely to Increase, Nearshoring a Viable Option.

In a recent survey by the Institute of Supply Management (ISM), 30%  of supply chain leaders say their companies are now embracing re-shoring.  This compares to 37% who indicated they were not likely to consider bringing work back.  A number of reasons are cited for this shift including protection from cyber attacks, revised tax policies and economic stability in Europe.   Tom Derry, CEO of ISM indicated the apparent trend of attendees seeing more advantages of keeping work within their home countries. *

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Near-shoring refers to manufacturing work that has returned closer to  demand markets eg: for America in near-areas such as Latin America.  With the advent of CNC and the diminished labor component in production, many manufacturers now find that near & local sourcing contributes to major savings in transportation, warehousing and inventory in motion. Other cost factors include**

  • Landed cost/Cost of Ownership (TCO) fully loaded
  • Longer lead times, resultant impact on customer satisfaction and aged inventory
  • Rising and shifting consumer expectations/time to market
  • Rising labor costs in emerging countries
  • Rising energy costs in emerging countries vs decreasing energy costs in the US
  • Increase in logistics costs  (admin, transportation, stock)
  • Increase risk of natural disasters (cost $300b in supply chain costs in 2012)
  • Importance of sustainability
  • Unprecedented volatility (energy, raw materials)
  • Government policies/regulation
  • IP Protection
  • * Source: 575 respondents from 2000 attendees at the Dallas Annual ISM Conference, Logistics Management, June 2013, pg 2

    ** 'Reshoring, Near-shoring, Best-shoring: Supply Chain Strategy" Spend Matters, May 2, 2013

    More info: 'Is the reshoring of manufacturing a trend or a trickle?' Forbes, June 27, 2012

     
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