The Supply Chain Issue and Nearshoring

According to a recent survey based on 10,000 businesses across 39 countries, the amount of businesses that have concerns about their supply chains is a staggering 93%.

When you take a closer look at these concerns and general challenges of the supply chain network, we can see the different aspects that are witnessing issues:

1. Disruptions in the supply chain due to lockdown policies and logistical challenges. This is particularly true for lower tier suppliers.
2. Strong changes in demand as multiple industries are impacted by the rolling lockdown and reopening policies.
3. Financial issues that have affected almost all businesses due to cash flow issues.

These interwoven issues have driven many businesses to pause their operations and rethink their supply chain operations. They have woken up to the realization that having agile supply chains are vital for competitiveness – and at the very least survival in the business environment.

And in order to rework these issues and adopt meaningful changes then actionable data can provide the right set of stats for the right type of change.

 Part of these changes can be advanced by nearshoring certain work processes and projects. But why nearshoring in particular?

There are broad reasons for why a business would want to take advantage of nearshoring capabilities and how to best combine process flexibility with a digital first approach.

Here are some of the advantages:

1. It can improve the resilience of the supply chinese well as cut down on the costs that are associated with common disruptions – a particularly relevant advantage given that supply chain disruptions are expected to continue for months more.
2. Compared to offshoring, it can help cut down on a business’s carbon footprint.
3. Likely reductions in staffing costs. Today procurement teams are under pressure to have digital risk solutions and automation in strategic sourcing and supplier management.
4. The ability to enhance delivery for a business’s customers on time and as expected – which is the most common KPI across all industries.
5. You can set out and implement scenario planning and stress testing, due to ensuring that part of this move to a digital twin of a business’s critical supply chain along with the supporting supplier data.
6. A reduction in logistical costs and the enhancement of flexibility.
7. A reduction in the challenges to regulations.

An example

Recently, jeans giant Levi’s nearshored its production operations using automated distressing for its jeans rather than doing it manually. In addition, Levi’s also nearshored some of its customer service operations.

Another survey from Europe found that 7 in 10 big retailers have already reviewed their supply chain due to the challenges from the pandemic, with ¼ of these retailers having already started to nearshore some of its business operations.