More Than Half of Supply Chain Executives Expect Nearshoring to Increase Over the Next Two Years
The results of a recent survey of global supply chain trends conducted by WT100 and the University of Tennessee indicates that more than half (52 percent) of supply chain executives expect nearshoring back to the U.S. to increase for industry in general in the next two years.
For those who expect near-shoring to increase, higher transportation cost was by far the most common reason cited (61 percent). In addition, the length of a global supply chain resulting in late deliveries and political instability were also was cited as a significant reasons to consider nearshoring.
For 57 percent of the respondents, the low cost of labor is still the greatest inducement to outsource. In addition, when companies need to increase production capacity, 33 percent look offshore.
Another topic receiving increased discussion among supply chain professionals is the issue of risk in global outsourcing. Just over half of the respondents (52 percent) said that they analyze and quantify risk in making their outsourcing decisions, meaning that 48 percent do not analyze risk. Also, only 53 percent of respondents consider supply chain risk (i.e. potential disruptions in their supply chain) when considering whether to outsource.
The greatest concern firms have with outsourcing is quality, with 52 percent of the respondents very or extremely concerned. After quality, the greatest fear is that the economics of the outsourcing decision will change, with 43 percent of the respondents very or extremely concerned about that.
When selecting an outsourcing partner, the most important factor is a commitment to quality (86 percent of the respondents consider this very or extremely important). After quality comes price as the next most important consideration.
Over 240 business executives from a broad array of firms participated in the study. WT100 and University of Tennessee will conduct this study on an annual basis to track major global supply chain trends over time.
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