Getting rightshoring right
To build resilience, “rightshore” supply chains—weighing labor costs, input costs, and the growing need for speed and flexibility.
Whether they need mustard seeds, natural gas, wine bottles, or semiconductor chips, makers of everything from condiments to cars have struggled to get the commodities and components they need since the pandemic. In a recent KPMG survey, nearly 40 percent of companies said they had experienced more than three significant supply chain disruptions in the past three years. Two-thirds of global manufacturing CEOs tell KPMG that they are focused on making their supply chains more resilient.
A full-scale retreat from offshoring is not the answer. Manufacturers will always need low-cost offshore sources for low value-added commodity products that can be stockpiled. However, labor cost is less critical for many products than speed, responsiveness, and flexibility. In this paper we show how companies can “rightshore” facilities and supply chains, using a combination of offshore, nearshore, and onshore sources--depending on the nature of the products being built. This spreads the risks, enables redundancy, and boosts flexibility while also maintaining cost controls.
