Nearsourcing: Effective Supply Chain Strategies

Nearsourcing: An Effective Way to Save Time and Money for Some High-Tech Companies

Many high-tech companies looking to increase the efficiency of their supply chains are turning to “nearsourcing”- manufacturing in foreign countries that are relatively close to end users. This is the opposite of outsourcing, where a company might move production to countries located on the other side of the globe.

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Considering Covid-19’s profound impact on labor costs, gas prices, and overall shipping costs, many high-tech companies are shortening their supply chain by implementing nearsourcing strategies, thereby reaping benefits such as:

Consistently Sufficient Stock

Nearsouring often allows a business to maintain sufficient stock with more stability, predictability, and efficiency. If there’s a shortage in supply, replacements can be delivered faster, often at a lower cost.

Nearsourcing Helps with Mitigating Rising Overseas Costs

Outsourcing had previously become known as one of the most efficient and cost-effective ways to manufacture high-tech products because it took advantage of lower costs of labor and other manufacturing inputs in countries on the other side of the globe. In the new Covid-19 normal, some of those savings have been reduced due to increasing labor costs and, most notably, shipping costs. With nearsourcing, some of those additional costs can be mitigated.

Supply Chain Efficiency

By providing their supply chain a regionally sourced supplier or manufacturer, many companies reduce the time it takes for their products to be delivered to their end users. With a shorter supply chain, they often achieve faster turnaround times for delivery and can better accommodate the demands of their customers, ultimately providing them a better overall experience.

More Consistently in Manufacturing

Nearsourcing often lends to better product uniformity by reducing the impact on product production of cultural and linguistic differences. Countries that are located close to each other are typically better culturally and linguistically aligned (and politically aligned) than countries that are separated by great distances.

Nearsourcing has become more attractive for many high-tech companies in the wake of the Covid-19 pandemic. It isn’t for everyone… many companies are content with continuing to outsource their manufacturing to the other side of the globe for a variety of reasons. But, for some high-tech companies, it’s a strategy that certainly deserves consideration.

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2022-02-18T19:12:54+00:00
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