This site depends on JavaScript to run. Please enable it or upgrade to a modern browser that supports it.

SALE ENDS TODAY! Save 15% on your CPIM, CSCP or CLTD learning system or bundle purchase with promo code BYESUMMER22. Learn More.

ASCM Insights

Supply Chains and the Reshoring Movement

title

Although global supply chains have opened up the world to economic benefits and increased access for consumers and communities, the past couple of years have shown how fragile these networks can be. An interruption in one corner of the world can quickly spread to countless others. As more and more organizations worked to achieve superior risk management, it’s no wonder that reshoring became a business buzzword. But now it’s definitely more than that, and many of these strategies are actually coming to fruition.

According to a new report from the Reshoring Initiative (RI), American companies are on pace to reshore nearly 350,000 jobs this year, the highest rate since 2010. International challenges such as frequent COVID-19-related shutdowns in China, extreme weather all over the planet, the Ever Given crisis in the Suez Canal, and escalating shipping costs are the main drivers of this shift.

John Gray, a professor of operations at Ohio State University, notes on NPR Marketplace that these situations are “sticky memories,” causing people to try to shorten their supply chains whenever possible.

Reshoring reduces shipping time and expense, cuts emissions, and gives companies more control over their suppliers’ operations. However, it comes with increased labor costs, which likely means that the manufacturing of items that don’t pose security, intellectual property or other critical supply chain risk will stay in low-cost countries.

Conversely, the jobs coming back to the United States are related to high-tech manufacturing,  particularly the production of semiconductors and electric-vehicle batteries. The 350,000 reshored jobs add about 3% to the U.S. manufacturing labor force. What’s more, these are well-paying positions that don’t require a college education, which creates more economic opportunity.

Dozens of companies have announced plans to invest in domestic manufacturing. For example, Massachusetts-based Ascend Elements is building a $310 million sustainable lithium-ion battery materials facility in Kentucky. The company might ultimately invest up to $1 billion in the effort.

The reshoring trend is happening around the world, too. Earlier this year, BCI Global found that more than 60% of European manufacturing companies expect to onshore or reshore at least part of their Asia production within the next three years. German retailer C&A Group onshored a new factory to increase domestic production of jeans. Swedish car manufacturer Volvo is adding an electric-vehicle factory in Slovakia to increase its production capacity. In Australia, a study found that 55% of companies plan to reshore their operations by next year. Analysts expect the trend to continue through 2030.

Digging deeper

The nonprofit RI will be among the presenters at this year’s ASCM CONNECT Annual Conference. Founder Harry Moser will team up with Suzanne de Treville, professor at the University of Lausanne in Switzerland and co-editor-in-chief of the Journal of Operations Management; David Sasso, president of DNY-Innova Textile Consulting Services; and Mike Fralix, president and CEO of [TC]2. They will share strategies for how supply chains can evolve and thrive more locally.

Bolstering domestic supply chains also is an area of expertise for our newest keynote speaker: General Stephen Lyons of the U.S. Department of Transportation Special Port and Supply Chain Envoy. He collaborates across a broad spectrum of private and public stakeholders to reduce costs and improve consumer confidence for all Americans. On Monday, September 19, General Lyons will discuss his key supply chain role and explain what he’s doing to strengthen America's networks.

Don’t miss your opportunity to dig deeper into this latest supply chain trend. Register today to save your spot.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer of the Association for Supply Chain Management (ASCM), the largest organization for supply chain and the global pacesetter of organizational transformation, talent development and supply chain innovation. During his tenure, ASCM has significantly expanded its services to corporations, individuals and communities. Its revenue has more than doubled, and the association successfully completed three mergers in response to both heightened industry awareness and the vast and ongoing global impact driven by supply chains. Previously, Eshkenazi was the managing director of the Operations Consulting Group of American Express Tax and Business Services. He may be contacted at abe@ascm.org.

Use of Cookies

We use cookies to personalize our website’s content and ads, to provide social media features and to analyze our traffic. We also share information about your use of our site with our social media, advertising and analytics partners who may combine it with other information that you’ve provided to them or that they’ve collected from your use of their services. You consent to our cookies if you continue to use our website.