Demand, trends, growing seasons — the market has moved in cycles since the very first entrepreneur set up his or her little roadside stand in an ancient village. Poised at the brink of another cycle, analysts are watching as fulfillment contracts in the wake of a reshoring trend that has left domestic companies wondering if they're ready to embrace it.
Have you considered the impact that having overseas materials and manufacturing suddenly show up next door would have on your business? There are certainly a number of benefits, but that doesn't mean reshoring doesn't bring challenges as well.
Consider the following ways your shipping workflows might change if your suppliers make the jump back home.
Order Sizes Will Likely Need Adjustment
Without the consideration of minimum piece orders for overseas shipping purposes, don't be surprised if offerings from domestic suppliers get a bit smaller. If your supply chain relies on having pallets of a certain raw material or component in specific numbers on a specific timeline, something as small as a change in available order sizes can throw a wrench in the works.
In the same vein, high-demand and low-demand times will align, so while there will no longer be a mandatory lull for foreign holidays such as Chinese New Year, your domestic orders will need to queue up alongside other domestic orders, potentially increasing turnaround times. Manufacturers may find themselves needing just as much lead time when placing their eventual orders. Rather than transportation eating up the time budget, delay will likely come from increased stateside demand.
It will be the long term planners who emerge victorious.
Oversight and Transparency: A Double-Edged Sword
Educated consumers and federal regulations are increasing the demand for transparency and ethical sourcing. It would seem that shifting chunks of fulfillment back onto home shores would be a win-win, in this case. However, as Frank Russo explains in an article for Manufacturing.net, policies and procedures may be more lax overseas while still remaining ethical. Domestic production houses and material suppliers will need to wrestle with land rights, high mandatory wages, unions and other considerations that likely didn't cause headaches prior to reshoring efforts.
While consumers and regulatory bodies will undoubtedly appreciate the transparency that comes with operating on home turf, your supply chain's to-do list just got much longer — potentially raising their prices along with it.
Expect Supply and Demand to Alter Transportation
Eager for more contracts and work after steadily losing business to overseas competitors, transportation companies are likely to start pulling out their calculators as soon as reshoring shows itself to be more than a spike on the charts.
Manufacturers must explore their options for shipment during this reshoring resurgence, pursuing government incentives and building comprehensive cost analyses between carriers. Just as you need to stay competitive, so do they, so don't be afraid to do plenty of research when selecting your new or expanded shipping partners. Manufacturers should weigh their transport options and take a step back to consider overall operational costs when partnering with a specific business, rather than the per-unit figures that tended to drive so many overseas decisions. Embracing new sourcing, after all, requires embracing new determination factors.
No matter how long the reshoring trend lasts, it's still prudent to view it as part of the overall cycle of sales, manufacturing and fulfillment.
As the Boston Consulting Group points out in SupplyChain247, reshoring is driven in part by a higher wage cost in China, which in turn is driven by a booming economy there. It isn't hard to extrapolate the possibilities as manufacturing builds and grows once more in America — potentially causing the same effect a few years later and driving manufacturing back overseas.