Production moving closer to home: report

More companies moving towards nearshoring, onshoring and similar practices

July 28, 2017
Purchasing B2B

FRANKFURT AM MAIN, GERMANY—Increasing customer requirements for products and services has led to the trend of nearshoring, which allows companies to respond with shorter delivery times and greater flexibility. Miebach Consulting has conducted an international study to determine how supply chains are affected by shoring strategies, to evaluate the factors for shoring decisions and to show what shoring trends companies expect in the future.

One of the main conclusions of that study is that an increasing amount of companies (51 percent of the participants) are producing closer to their markets instead of moving production abroad. The study also shows that this percentage is going to increase even more, since 26 percent of the participating companies believe that nearshoring is a trend that is going to have a very high or high relevance in a near future, above the offshoring and the onshoring or local production (22 percent and 17 percent, respectively).

Asked more in detail about which localization strategy they would choose and where they would like to implement it in the future, respondents pointed out that in Europe the preferred strategy will be nearshoring (69 percent), in the US onshoring will strengthen (43 percent), while offshoring is still a major trend in Asian countries (67 percent).

“Modern production processes ensure a stronger focus on customers and can be a competitive advantage given the right location strategy,” said Bernd Müller-Dauppert, member of the management board, Miebach Consulting GmbH. “This is where near- and onshoring become more important for companies. Especially the population within the major economic regions can benefit from job creation due to production in proximity to markets.”

The study participants expect an increasing supply chain complexity due to near- and onshoring trends. Choosing an optimal shoring strategy and selecting the ideal location requires an integrated consideration of both supply chain and production networks.

In all, 127 companies from various sectors took part in the study. Around one third of participants are from North and South America and two thirds are from Europe.