What is reshoring?
Reshoring is the process of bringing [manufacturing](/process) back from a foreign country to the place where the products are actually sold and used. These days that usually means bringing production back from China, elsewhere in Asia, or India. Next to the manufacturing of the parts themselves, the making of molds and dies is often done offshore too, and that can be part of a reshoring move as well.
The difference with nearshoring
Nearshoring means moving production to a closer destination, though not necessarily to the country where the product is sold, processed or used. Think of Europe or the United States as a region rather than a single country.
In both cases the objectives line up: shorter supply chains, shorter lead times and less risk. The total cost of ownership and operation can also work out lower when you reshore or nearshore your manufacturing. As a bonus you support economic growth in your own region, keep more control over your intellectual property, and reduce your footprint.
The main reasons to reshore
- Shorter lead times
- Higher and more consistent product quality
- Rising wages offshore, which erodes the financial advantage
- Access to a skilled workforce
- Local tax incentives
- The value of a "made here" image
- Lower inventory levels, better returns and better cash flow
- Faster response to movements in the market
- Lower risks around intellectual property and regulatory compliance
- More room for innovation and product differentiation
- Avoiding high and fluctuating transport costs
- The same time zone, which makes communication easier and avoids language barriers
Near sourcing
Near sourcing is a related strategy: making the supply chain of a product that still has to be manufactured leaner by having the products or parts made outside your own organisation, while keeping proximity as the leading criterion.
Some products can be made in Europe at the same price as in Asia, or even more competitively. For other products that is harder to achieve and the manufacturing price itself will be higher, but there are plenty of benefits that can outweigh the piece price alone. Those benefits are the same as the reasons for reshoring listed above.
Production Heroes has supported dozens of projects in setting up production in Europe or bringing it back from Asia. If that is on your agenda, feel free to get in touch. Our network of factories, covering a wide range of materials, manufacturing techniques and assembly work, allows us to quickly validate which price points are realistic. Send us the documentation of the design, images of the product, or samples, and we will take it from there.