Catching the Reshoring Wave

Surf’s up, Vendorvillians!

In the ocean that is the supply chain industry, currents are ever shifting, and smart suppliers are going with the flow. After decades of increasing offshoring, many companies are now investing in nearshoring and/or reshoring efforts—like surfers, who know when to paddle out and when to ride the waves back to shore.

Nearshoring and reshoring are both strategies for relocating production or sourcing from overseas to territories closer to the supplier’s home market.

🏄 With nearshoring, operations are moved to a nearby country, typically within the same continent.

🏄 With reshoring, production shifts to the same country, thereby locating production to the same domestic market as retail sales.

In recent years, reshoring and nearshoring have witnessed significant strides, driven by the need to mitigate risks associated with dispersed supply chains, as well as uncertainty surrounding the Trump administration’s implementation of tariffs.

Additionally, free-trade agreements such as the USMCA have incentivized these efforts, encouraging US-based companies to relocate manufacturing to Mexico by streamlining customs clearances and reducing trade barriers.

Why You Might Want to Nearshore or Reshore

Many suppliers see substantial benefits to nearshoring or reshoring their manufacturing and distribution facilities. However, these efforts also come with some significant downsides—as any surfer can tell you, you can’t learn to carve a wave without some major wipeouts along the way.

Upsides of Nearshoring and Reshoring:

☀️ Nearshoring and reshoring can reduce compliance risk for vendors and manufacturers. Compared to offshoring, companies can better manage product quality, regulatory and retail compliance, and intellectual property when facilities are closer to the vendor’s home base.

☀️ Reshoring and nearshoring can provide environmental benefits. These processes reduce the distances that products travel, lowering both transportation costs and your supply chain’s carbon footprint.

☀️ Relocating facilities to be closer to you will reduce production time and increase efficiencies. Shorter distances from production to distribution facilities benefit lead times. Additionally, the proximity enhances companies’ visibility and control over their goods.

Downsides of Nearshoring and Reshoring:

🌊️ Reshoring and/or nearshoring can create issues with regulatory compliance. Any shift in the countries you do business in will inevitably result in you having to navigate a new and potentially unfamiliar regulatory environment.

🌊 Oftentimes, nearshoring and reshoring efforts are associated with increased costs, both from labor and initial investment. Workers in offshore facilities often command lower wages than workers closer to home, so when facilities are relocated to closer facilities, labor costs can increase.

🌊 It’s not guaranteed that nearby locations will have workers with the skills you need who are within your budget. Issues with finding qualified workers can plague a business investing in nearshoring and/or reshoring, especially depending on the location and the specific industry.

Retailer News 🗞️

Retail Dive
Walmart challenges consumer perceptions with ‘Who Knew?’ campaign
“The refresh also included a focus on delivering greater consistency across channels like its app and website, moves meant to support its goal of becoming a true omnichannel retailer.”

Supply Chain Dive
Tariffs squeeze off-price retailers more than expected
“But once tariffs became a reality, it became clear that they pose a greater risk to off-pricers than previously thought, according to Evercore ISI analysts led by Michael Binetti.”

SPS Commerce
Universities are tailoring supply chain courses to prepare students for the industry's AI revolution
“With AI becoming an integral part of supply chain operations — in areas like inventory management, warehouse technology, and delivery routes — US universities and certification programs are incorporating tech-focused coursework into existing supply chain management lessons so that students can prepare to work in the sector's up-and-coming careers.”

⭐ Rick’s Tips ⭐

“Walmart has recently changed their requirements for transporting fresh meat items. Since 2019, time and temperature recorders (TTRs) have been required on all trucks transporting meat. However, as long as the product was at an acceptable temperature when it arrived at the distribution center, it wasn’t rejected. Now, Walmart will reject any load of fresh meat transported without a TTR for failing inbound temperature monitoring requirements. If you haven’t yet done so, get those TTRs installed!”

Let's Circle Back

Sometimes, exciting things happen which can make you feel as good as a surfer doing tricks off the crest of a wave. That’s how we felt over here at SupplyPike when we were recently featured in Arkansas Business! Read an excerpt of their coverage of us below:

“Ryan Petty, senior product manager, said retailers deduct significant amounts from supplier payments through fees, fines and chargebacks, which can erode total sales by 5% to 10%. “It’s a huge pain point of money loss when every penny counts,” he said.

SupplyPike attacks this problem with automated dispute resolution and data tracking. Its automation tool takes on complicated manual dispute tasks like gathering documentation, submitting claims and tracking resolutions, which Petty said result in faster recoveries and higher dispute success rates.”

Until next time,

❤️ Vendorville