Nearly three quarters (74%) of U.S. small and midsize businesses (SMBs) plan to shift “most or all” of their suppliers to North America as the nearshoring trend gains steam, according to a poll of 300 supply chain managers conducted by the business software marketplace Capterra.
The move is well underway for many businesses, as U.S. SMBs have switched an average of four suppliers from overseas to ones in North America in the past two years, Capterra's “2023 Supplier Relationships Survey” found. However, with each SMB maintaining relationships with an average of 27 suppliers, the process has a ways to go.
The industries that have made the most progress in nearshoring so far include: consumer electronics, food/beverage, and automotive, while apparel and cosmetics lag behind.
Companies say they are motivated to switch to domestic suppliers in order to cure three main headaches: unreliable delivery timeframes (63%), inconsistent quality of delivered goods (54%), and insufficient sustainability (54%).
Indeed, nearshoring can help create shorter delivery time frames, more consistent product quality, and more eco-friendly business practices, Capterra said. But the company noted that switching vendors is not a quick or easy process.
According to Capterra, when evaluating a new supplier, SMBs should consider factors beyond proximity, such as pricing, experience, expertise, production capacity, and quality standards.
“It’s clear that SMBs believe in a ‘shorten to strengthen’ approach for their supply chains,” Olivia Montgomery, associate principal supply chain analyst at Capterra, said in a release. “In fact, 92% of SMBs believe it’s important to shorten supply chains for long-term success. As manufacturers gradually ramp up production across North America, supply chain leaders should take this time to evolve their nearshoring strategy.”