Supply Chain Disruptions Drive Manufacturers to Innovate with Nearshoring

COVID-19 supply chain shutdowns sent manufacturers everywhere scrambling to pick up the pieces of broken logistics networks and retrieve bottlenecked materials. However, today, manufacturers are protecting supply chains from further disruptions with nearshoring and cutting expenses in these times of rising costs.

By nearshoring supply chains—sourcing materials in areas closer to their designated markets instead of distant countries like China—manufacturers can guard against ongoing disruptions. A recent Gartner study reported that 33% of surveyed global supply chain leaders had either moved their sourcing and manufacturing activities out of China or planned to by 2023. Though moving entire supply chains to new countries can seem drastic, many manufacturers have found that nearshoring increases supply stability while reducing transportation costs.

Limit the risk of future delays

Geo-political conflicts and health crises stretch supply chains around the world, exposing vulnerabilities to disruptions from all types of international catastrophes. Manufacturers who nearshore can more easily access supply chains when destabilizing events stall the delivery of goods.

With supply sourced closer to domestic markets, materials can move over land rather than air and water. If a global disruption halts air and water shipments, manufacturers who nearshore can access raw materials with land transportation, such as trucks which rarely face the same restrictions. Nearshoring also allows manufacturers to take advantage of time-zone overlaps so they can better coordinate with suppliers in the event of supply bottlenecks.

Reduce transportation costs

In light of soaring inflation, manufacturers want to reduce expenses without sacrificing timeliness and efficiency. Nearshoring supply chains offer several cost-cutting advantages.

With shorter supply chains, manufacturers can spend less on transporting raw materials, cutting down, for example, on the six to eight weeks it typically takes to transport materials between China and the US. Given the recent rise of shipping container prices to ten times their pre-pandemic levels, this fact represents an important cost-saving opportunity for manufacturers. Shorter supply chains also mean fewer chances for supplies to get damaged on the way to their destination.

In addition, by choosing suppliers in areas closer to designated markets, manufacturers can often benefit from favorable trade agreements. For manufacturers in North America, goods exchanged between the US, Mexico, and Canada may be subject to zero tariffs due to agreements such as NAFTA and the USMCA Free-Trade Agreement.

Harness the power of strategic data

Times of uncertainty call for innovation. Facing ongoing supply shortages and transportation delays, manufacturers need to embrace new approaches. By combining a nearshoring strategy with technology to consolidate their supplier and carrier data, manufacturers can achieve the agility they need to manage more resilient supply chains at lower costs.

Comprehensive business intelligence tools simplify supply chain management by allowing manufacturers to visualize data and highlighting opportunities for workflow optimization and growth. When shipping delays and supply disruptions get in manufacturers’ way, business intelligence tools allow for more visibility of transportation processes and a streamlined journey from nearshore sourcing to payment.

To improve their flexibility and efficiency in the face of supply delays, manufacturers can lean on CTSI-Global’s Business Intelligence Solutions for seamless transportation management and oversight. Our technology centralizes shipping data and provides actionable insights to help analyze trends, boost productivity, and enhance communication.

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