Reshore or offshore? That is the question

As supply chains continue to be strained by more and more global disruptions—such as the pandemic, acute climate change, trade disputes, cyberattacks, and supplier bankruptcy—many executives are growing increasingly concerned about their dependence on other nations for critical goods and supplies. As a result, a number of companies are assessing whether reshoring should be part of their future strategic plans. 

“Learning how you can make better decisions on sourcing onshore and offshore is critical,” noted Harry Moser, founder and president of the nonprofit organization Reshoring Initiative during his “To reshore or not to reshore: How to decide” session at the Council of Supply Chain Management Professionals (CSCMP) EDGE Conference on Monday.

In a recent 2021 survey by BDO Manufacturing, 22% of those companies that want to relocate manufacturing to another country are planning on reshoring to the United States. This increased interest in bringing manufacturing jobs back to the U.S. has the potential to solve some of our nation’s biggest challenges, says Moser. Reshoring can help provide jobs to disadvantaged inner-city populations, those in rural locations hit hard by the opioid epidemic.

The Reshoring Initiative’s total cost of ownership (TCO) tool can help companies decide whether reshoring is the right decision for them. This free, customizable tool is available online at reshorenow.org. It looks at 29 cost factors, freight rates from 17 countries, and offers easy-to-use explanations and references to help select values. 

Moser advises companies considering reshoring to:

• Set priorities and conduct a TCO analysis.
• Start by considering reshoring products that cause pain. Examples include those products that incur high delivery costs, require holding excess inventory, or are subject to regulatory issues.
• Evaluate the cost of transitioning from offshore sources of supply to domestic ones. 
• Work with natural allies within your company—such as proponents of Lean thinking, sustainability, and quality control—during the evaluation process.