Offshoring, Nearshoring, Reshoring?
Many companies are beginning to realise that today’s supply chain demands mean that offshoring production isn’t as great as it once was. Originally moved to countries such as China, India and the Philippines to reduce costs, businesses are now seeing their cost savings narrow, due in part to escalating labour costs, as well as environmental and political risks.
Together with the often hidden costs of shipping, holding greater stock levels because of increased lead times and stock in transit, to name a few, questions not what you are gaining from being so far removed from the production process but what you are losing. This presents the opportunity to relocate.
As more and more businesses turn their attention to manufacturing quality and control, and with greater automation reducing the reliance on ‘cheap’ labour, the focus is shifting towards reshoring and nearshoring. As the names suggest, reshoring brings manufacturing back to the UK (or the country of origin) and nearshoring relocates the manufacturing to a closer geographical location.
The key advantages of reshoring or nearshoring are:
- Reduced lead times
- Lower freight costs
- Improved customer service and communication – eliminating the time zone and language barriers speeds up issue reporting to hours rather than days
- Better quality control and consistency
- Import duty and tax benefits
- Fewer supply disruptions
All of these factors improve efficiency, which in turn can save you time and money, while improving quality.