Reshoring Trend Continues to Grow – Modern Distribution Management

More evidence is appearing that the trend of near-sourcing or reshoring is expanding. More than 70 percent of durable goods
manufacturers increased sourcing of materials and services from U.S. suppliers last year, according to buying consortium Prime
Advantage’s 2013 Group Outlook Survey.

Even those who aren’t sourcing more from the U.S. are sourcing closer to home. One in five survey respondents indicated
they had brought international sourcing closer to the U.S. over the past year, with around 28 percent saying they’ve
moved sourcing to Mexico.

The study found gaining shorter lead times to be the most common driver for near-shoring (67 percent), and forty-nine percent
listed reducing inventories as a key driver. Better supply chain control (40 percent) and better overall communication (39
percent) were also common motivators.

The total cost of offshoring may also be a factor for some, according to Harry Moser, founder of the Reshoring Initiative.
Moser says companies are increasingly considering factors beyond materials prices, such as freight, packaging and travel costs
in calculating the total cost of offshoring.

In a recent interview with Manufacturing Revival Radio, Moser said 60 to 70 percent of large manufacturers are
placing an increased priority on developing a “total cost of ownership” model to use in making their sourcing
decisions.

Despite this, Moser says companies typically ignore these models in favor of basic materials pricing comparison. This can
often make the difference between good and bad offshoring decisions, he says, since unseen costs often tip the scales toward
local sourcing as the best option.

The Reshoring Initiative website offers manufacturers a “Total
Cost of Ownership Estimator” to help them avoid what the website says is a 20 to 30 percent miscalculation in most companies’
price-based offshoring calculations.