Now more than ever, manufacturers see reshoring as a more attractive option as they continue to deal with rising transportation costs, bottlenecks at ports and uncertainties about lead times and material availability. The reshoring movement is being driven by an increased emphasis on supply chain resiliency. Bringing manufacturing closer to home reduces risks and improves responsiveness.

Reshoring can solve problems, lower costs, provide a greener solution and create jobs. Conceptually, it makes sense. Yet the thought of reshoring some or all of the supply chain can be intimidating for a small or medium-sized manufacturer (SMM) lacking supply chain expertise.

The best way to begin evaluating the case for reshoring is to go back to why the decision was made to move the supply chain offshore. Dust off the presentations and pull those Excel files from the archives to answer these questions:

There is a reason that reshoring hasn't been seriously considered until now. Once you understand why the supply chain went offshore in the first place, you must quantify the current problems you are trying to solve. Reshoring should not be a solution in search of a problem. Clearly define the issues you want to resolve and evaluate whether reshoring is the most effective approach.

Questions to guide your decision-making should include:

Focus on a few key starting points to research and analyze the advantages and disadvantages of reshoring, while conserving your valuable resources and giving your team the information they need to make strategic decisions.

Ultimately, the Total Cost of Ownership (TCO) drives many reshoring decisions. TCO is the sum of all visible and hidden costs associated with the acquisition, transportation, storage, finance, transactions and environmental impacts of every activity of the supply chain. Knowing your TCO helps clarify risks and provides a structured approach for optimizing your supply base and improving your overall value.

Historically, while overseas outsourcing initially offered significant cost advantages, many factors have eroded those benefits. For example, while labor costs in Asian countries were initially significantly lower than those in Western countries, they have steadily increased over the years. Currency issues and tariffs have also led to higher prices. Meanwhile, global trade tensions, geopolitical uncertainties, and other factors such as the COVID-19 pandemic have led to more uncertainty and costly disruptions.

To make informed reshoring decisions, manufacturers must carefully evaluate the TCO of their supply chains and consider a range of factors, including labor costs, shipping costs, currency fluctuations, quality control, intellectual property protection, supply chain complexity and visibility, and environmental and social responsibility.

Shipping and storage costs are obvious starting points, but there are other areas you should evaluate when determining if reshoring is right for your business. Reshoring in many respects is no different than any other organization-wide project. You need to consider your people, processes, and technology. Be sure to account for these three areas.

Evaluate your current supply chain technology and determine how it can be leveraged to support reshoring. One example of how technology has become the backbone of the supply chain industry is AI. AI-powered tools can analyze vast datasets to improve sales and operations planning, predict demand more accurately, identify and mitigate potential risks, and optimize inventory levels while enhancing supplier relationships through data-driven insights and collaborative platforms.

However, if you still have your supply-chain data in Excel files downloaded from an ERP system, build a visual of these siloed Excel datasets and determine your starting point, then ask these questions:

Have your analytics changed over time to keep up with the global supply chain evolution? If not, this needs to be addressed before making any final recommendations regarding the solution to your current supply chain problems. These questions can help get you started:

Assess your overall supply chain management and team bandwidth, strengths, and weaknesses. You will need to ask questions like:

When defining your team's role within the new supply chain ecosystem, carefully evaluate potential partnerships with suppliers. These partnerships can significantly enhance your team's capabilities, effectively expanding its reach. Furthermore, they provide a direct and immediate connection to your most crucial suppliers.

Reshoring will require you to build a resilient domestic supply chain, which isn't just about meeting immediate needs but fostering innovation, improving efficiency, and mitigating risks through effective relationships. To capitalize on reshoring opportunities, shift your focus from solely seeking the lowest cost per unit to prioritizing strategies and relationships that offer long-term value. This is a chance to find vital partners who will collaborate with you in areas such as:

Supplier relationships thrive when partners work together on strategic initiatives, such as testing new processes and developing cost-saving approaches. Look for suppliers who are eager to approach problem-solving and challenges as a team by encouraging open communication.