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Reasons to Reshore

Reasons to Reshore

Reshoring, also referred to as onshoring has become quite popular in an array of industries in the United Kingdom. It refers to bringing back functions that were previously outsourced abroad. There are several reasons why reshoring has become a growing trend, including reducing the wage gap between developed and developing economies as well as the need to have more control over supply chain risks and product quality.

According to a survey by the United Kingdom’s Manufacturing Advisory service, 11% of the participants recalled some production to the country in 2013, while 5% had offshored aspects of production. In the past several years, over 1500 manufacturing jobs have been reshored.

These are not big numbers, but in comparison, the United States had over 80,000 manufacturing jobs reshored in the same period. Additionally, research conducted by General Electric Capital and Warwick Business School shows that in the next 3 years, onshoring may end up creating an additional 378,000 jobs in the United Kingdom.

When asked why jobs are being reshored, the Manufacturing Advisory Service identified the following reshoring benefits in order of importance:

-Improve quality

-Reduce lead times

-Boost the supply chain

-Reduce labor costs

There are numerous reasons why companies choose to reshore various aspects of their supply chain. Even though the cost is often considered a primary factor, there are other reasons including boosting inputs consistency, minimizing inventory as well as clustering manufacturing plants near research and development departments in order to boost innovation.

Reduced risk is another vital element to keep in mind when it comes to onshoring. A good example of what can occur when supply chains lack transparency and become too complicated is the horsemeat scandal. Another example is the controversy between Apple and the manufacturer Foxconn’s relationship. Having your suppliers near home minimizes regulatory compliance risk and also makes it easier to conduct audits. These are some of the primary reasons to reshore today

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