Reshoring, nearshoring and multisourcing – keeping the essentials close at hand

Affected industries: Primarily B2B, especially manufacturers with global value networks, but also some B2C, primarily those involved in e-commerce with increasing cross-border sales

Affected supply chain segments: All segments, especially full truckload (FTL), less-than truckload (LTL) and courier, express and parcel (CEP) services

What are reshoring and nearshoring?

Reshoring is the practice of transferring a business operation that was moved overseas back to the country from which it was originally located. On the other hand, nearshoring is a process to bring a business operation to a nearby country, often one with favorable conditions for trade with the base country. In the EU, nearshoring initiatives are common by making investments in Eastern European countries, where companies benefit from a common legal and market framework when moving goods and supplies across inner-European borders. Both reshoring and nearshoring aim to combat the high risks and costs involved with long shipping routes and cross-border trade.

What is multisourcing?

Multisourcing is the diversification of suppliers for essential materials and services, a strategic move to prevent dependency on one or few suppliers. It has a similar aim to a regional diversification strategy. In this way, it can be understood as a tactic to improve supply chain resilience, as multisourcing reduces the risk of local events, such as political unrest or natural disasters, as well as supplier-specific events such as bankruptcy, on a supply chain.

Why should my business consider reshoring or multisourcing?

The practices are increasingly attractive to logistics players as force majeure events, including unexpected trade tariffs, hurricanes, labor strikes, and pandemics, appear to be on the rise. Additionally, governments globally are playing a more active role in attracting foreign companies and investment while promoting domestic business. Businesses have begun to consider the regional diversification of production as resilience becomes a key factor for decision making, in addition to markets and costs.

Getting ahead of the trend

When considering this trend, businesses need to figure out how to maximize global supply chains in terms of long-term value, which means not only generating profit but also balancing sustainability and resilience. How can you eliminate redundancies to most significantly reduce risk across the supply chain – and potentially achieve additional positive effects like short delivery times?