Reshoring: Going Back Is the Way Forward for Your Delivery Promises [5 Reading Tips]

Reshoring Reading Tips — Source: Pexels/Anthony Beck

Customers who want to order something at the moment usually have to reckon with the fact that it is not available or will not be delivered for several weeks. Those who decide to make a purchase anyway will have to deal with further delivery delays on top of that. This is due to limited production capacity and various restrictions imposed by certain countries, which are delaying imports as a result of the pandemic.

This stretches the patience of customers. However, companies have no influence on supply bottlenecks for goods and raw materials from abroad.

So what can they do to keep their delivery promises and secure the loyalty of their customers?

Reshoring: Back to the Roots

In order to reduce dependence on foreign production facilities and suppliers, companies are increasingly producing their goods in their home country again or at least in nearby foreign countries (known as nearshoring).

Production close to home not only reduces the interfaces where delivery problems arise, but also increases flexibility when demand changes. This means that even customised products such as kitchens and cars can be delivered to customers in a timely manner.

Reshoring: Digitalisation Makes It Possible

This strategy seems unusual at first since »Offshoring is the way to go« has been the credo for decades. However, digital development is causing this credo to crumble and is setting new standards that make it worthwhile to think about domestic production and logistics facilities.

According to a study conducted by McKinsey, 80 per cent of supply chain managers worldwide have invested in digital technologies in the last two years. Highly efficient processes make production increasingly cost effective and can be managed by a small but trained workforce. Developing and implementing highly automated production and delivery processes abroad may be difficult due to a lack of training opportunities.

That is why our client STIHL relocated part of its chainsaw production to its Waiblingen plants back in 2009. This created new jobs in Germany and enabled the company to save additional costs in the form of taxes and customs duties.

Reshoring Offers More Than Just Flexibility

In addition to better control of production and delivery processes, reshoring offers other advantages. The »Made in Germany« label, for example, still stands for quality and is considered a persuasive selling point. Moreover, the location strategy benefits the environment – not only because fewer CO2 emissions are generated due to shorter transport routes, but also because Germany has stricter regulations regarding pollutant emissions than many other countries.

This definitely makes reshoring an option that companies should consider in the future.