Facing the Possibility of Mandatory Reshoring or Near-Shoring?

Facing the Possibility of Mandatory Reshoring or Near-Shoring?
Here’s What You Need to Know

The consequences of COVID-19 disruption have been so sweeping and so profound that it will require years to fully understand and accurately assess the social, economic, and political impacts. Almost no sector of society or industry has been left untouched, and the pandemic has brought dramatic changes and accelerated existing trends that will define the next decade.

At Pivot International, our extensive manufacturing capability across the US, European, and Asian markets positions us at the leading edge of trends that are reshaping the global supply chain landscape. For nearly fifty years, we’ve been a proven partner for successfully defying disruption, increasing resilience, and capitalizing on emerging opportunities. With advanced supply chain solutions and product development expertise that spans twelve industries, we’re behind some of the world’s most successful innovations.

With the shift toward regional protectionism, companies that do business involving security-sensitive or critical components are facing the possibility of mandatory reshoring or near-shoring for at least one tier of their sourcing network. With such mandates comes new challenges that companies will need to overcome and new opportunities they’ll want to be prepared to seize.

The Outcome of Globalization

For more than two decades, supply chain globalization has been steadily increasing. It has brought international partnerships and trade deals that — at their best — have delivered dramatic reductions in labor and costs. In this world of complex and tightly woven interdependencies combined with rivalrous dynamics and volatile market forces, companies have maximized profit by prioritizing efficiency over agility.

COVID-19 and continuing trade tensions have revealed and exacerbated a host of potential risks for manufacturers. For some companies, this means supply chain reconfiguration will be mandatory, and the question becomes one of retaining the cost-benefits of China-based manufacturing while mitigating the risks.

Hybrid Approaches

Reconfiguring your supply network is almost never an all or nothing affair. Most companies that are facing mandatory reshoring or near-shoring are opting for a hybrid model where portions of their supply chains remain in Asia while new suppliers and vendors are procured in Europe and the US. Not only is this hybrid approach less disruptive than all-out reshoring or near-shoring, but it also facilitates greater agility in rapidly scaling production to consumer and market demands.

It bears clarifying that a hybrid approach differs from true diversification. While a hybrid approach can address the challenges of regionalism, it requires supply network diversification and transparency to build intra-region and cross-region sourcing security.

Cost-Effective Alternatives to China

Global manufacturing will always play a central role, especially as it relates to consumer goods. Asia’s manufacturing brand strength will hold strong and remain critical to competitive advantage. But companies also need to understand they are standing at the threshold of a new era in which cost-effective alternatives to China-based manufacturing will become increasingly sought after.

Pivot is a premier provider of alternative sourcing solutions that have played a key role in protecting its partners from the impacts of COVID-19 disruption and ongoing US-China trade tensions. With more than 200,000 square feet of manufacturing capability across three continents, including company-owned facilities in the Philippines, Pivot is a trusted partner to companies worldwide.

Pivot delivers the highest quality control standards and regulatory compliance with multiple IEC and ISO certifications (9001 and 13485), CE certified, FDA registration, UL listing, and CSA approval. If you’d like to learn more about how we can support your business, contact us today to see how we can help your company successfully prepare for the new manufacturing era.

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