Why Onshoring Might Be the Smartest Solution to Global Supply Chain Challenges
- Companies are reassessing their supply chains to prepare for “unexpected” future disruptions.
- Onshoring is viewed as one way to lessen global risks that were brought into focus by the PPE shortage.
Supply chain resiliency can go a long way in mitigating the damage of a challenging situation, but what can enterprises do when they are struck by a global event that was impossible to predict? The world came face-to-face with exactly that in 2020, a year that will be remembered for a pandemic that simultaneously reduced retailer occupancy and hindered consumer spending. Businesses have had to quickly rethink their strategies, wondering how they should proceed at a time of lingering confusion and ongoing uncertainty.
The path forward may not be as intimidating as it sounds. Rather than focus on the things they can’t change, businesses could benefit by bringing offshored operations back home to their original country. Onshoring could be invaluable in combating the COVID-19 pandemic, as well as the persistent U.S.-China trade war. With reduced margins amid the current climate and concerns about resiliency within traditional logistics networks, organizations have been reassessing their supply chains. Now they can do something about it and come out stronger as a result.
Although global supply chains are often dispersed across many locations, organizations can benefit by realigning their operations. By having at least some components of a supply chain close to home, businesses can reduce the risk of potential delays. Better still, organizations may also enjoy improvements to both the environment and the bottom line.
Overcome Unanticipated Challenges
When considering what this means for the future, it’s important to remember that global supply chains are not going anywhere. For generations they have allowed retailers to obtain and sell a significantly higher number of products from all over the world. This allowed consumers to purchase exotic foods even if they were not in season or simply could not be grown locally, and it allowed the latest high-tech devices to reach customers worldwide.
That said, businesses are likely to be interested in consolidating various parts of their supply chain. If they were to bring some of their manufacturing stages closer together, for example, they could streamline certain aspects and reduce their carbon footprint by decreasing the distance supplies must travel.
Not all global supply chains are effective or efficient in their current form.
It’s also worth noting that not all global supply chains are effective or efficient in their current form. This was especially obvious when looking at the primary manufacturers of personal protective equipment (PPE). China leads this market, which did not seem to be terribly problematic until the coronavirus arrived. Now the whole world is in need of PPE, particularly masks. After determining that any face covering could help reduce the spread of COVID-19, the Centers for Disease Control and Prevention recommended that everyone, young and old, wear masks when leaving the house — especially in crowded environments.
To help in the fight against the virus, many domestic fashion brands converted their factories to develop, manufacture and deploy masks as quickly as possible. Some brands even turned to home-based manufacturing and had their workers sew from home. It was an impressive effort, and it meant that more people were able to get the face coverings they needed to leave the house safely.
This is just one example of businesses that are relying on local manufacturing to ensure that local markets receive the items they need most.
No one knows when the world will go back to normal, so organizations cannot wait until that day comes — nor should they go back to the old way of doing things once the pandemic is over. They must work hard to strengthen their supply chains, and that means examining alternative solutions. Onshoring is one such option, bringing supply chains closer together for improved resiliency and sustainability.
It is impossible to predict the unexpected, but businesses can position themselves to overcome potential disruptions that may arise out of future global events. In doing so, they will be better prepared for whatever comes next.