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Submitted by NAV Insights on 26 August 2020

Why Manufacturers Should Be Onshoring, and How to Do It: Part 1

4 Reasons for Onshoring

For years, manufacturers have been offshoring—going overseas with at least some of their manufacturing to remain competitive. But that has changed. Due to economic advantages and concerns about quality and supply chain issues, many manufacturers are bringing operations back to the U.S. Is this a good idea for your company? And if so, what will it take to make it happen? This blog series discusses both.  

Part 1: Offshoring is a Thing of the Past: 4 Reasons to Onshore

There are many reasons—from economic to logistical to quality and control—that you should consider onshoring:

Reason #1: Offshoring Isn’t Necessarily More Cost Effective

Countries like China perform much of the offshore manufacturing, but even in third-world countries, employees are demanding better pay and benefits. In addition, fuel and other costs involved in the supply chain affect profit margins. It is worth doing a cost comparison to see if it might be cheaper to reshore all or part of your operations.

Reason #2: It’s a Question of Quality

It’s a commonly seen news story: Products of sub-standard quality being recalled. This is a continuing—if not growing—concern with offshoring. At best, poor quality products cause customer satisfaction issues; at worst, they can cause injury or death—putting your company at great risk. While issues tend to be with tier 3 and 4 companies (those that supply sub-components to tier 1 and 2 manufacturers) and revolve around capacity, it is still a very real concern. Is it worth taking the chance to save money?

Reason #3: Time is Money

What do you think customers want? Cheaper or faster? This is a serious question to consider because offshoring can add weeks to delivery time. Also, keep in mind that some manufacturers require payment from you when the goods leave their facility—which can create cash flow issues for you.

Reason #4: Made Locally

The fact is that many consumers want to buy products made in their country to support the economy and because they feel more confident in the quality. Depending on your customer base, this could be a huge competitive advantage.

One Final Note

Still not sure? Learn more about why you should consider reshoring and how you can do it. Download our eBook, Reshoring Your Manufacturing Operations: Is It Time…and Are You Ready?