The recent history of supply chain disruption has put nearshoring firmly on the agenda for tech companies in Europe, and across the globe. Many have already started the process and more still are investigating the best ways to adapt their shoring strategies and reduce risk. In our recent whitepaper in collaboration with Reuters – A Generational Shift in Sourcing Strategy – we explore the trends, challenges and opportunities for businesses looking to bring key elements of the supply chain closer to home.One of the key findings is the importance of businesses finding the right partners – governments, trade bodies and logistics partners – to ensure their strategy works. In this blog, we’ll delve deeper, exploring what great partners look like and how they can help drive results.
1. Political stabilityA stable geopolitical system is key when selecting countries or regions as it directly impacts business continuity, vital for robust supply chains. Political stability provides a predictable and secure environment that fosters investor confidence, protects assets and enables long-term planning. For example, in the first six months after the start of the Russia-Ukraine war, by 120-130%, and coal prices rose by 95-97% globally.
2. Skilled workforce
Labour shortages have accounted for 47.8% of regional manufacturers' and retailers’ supply chain disruptions. Recruitment and retention of skilled employees is an increasing challenge across the supply chain where expertise is vital.Any change in shoring strategy needs to ensure that target countries have a talent-rich environment helping them stay robust in the immediate future and longer term.
3. Production capacityStable businesses with strong workforces are great, but if they can’t meet the production requirements of the business, you need to look elsewhere. A good example is Vietnam, which has a strong history of friendly operations but doesn’t have the capacity to handle a lot of big players at once. It’s crucial for manufacturers to conduct robust internal analysis into the exact capacity levels they need before selecting a sourcing hub.
4. Transport infrastructureThe variety of transportation options available and well-developed logistics infrastructure ensure a seamless movement of goods and materials, reducing lead times and enhancing overall responsiveness. With reliable transport networks, businesses can adapt to changing market demands and efficiently manage inventory levels whilst having the agility to explore new markets and diversify distribution channels.
44% of regional manufacturers and retailers say sustainability is the main reason they’re looking to change their sourcing strategy. Unsurprisingly, consumer pressure, shareholder expectation, and legislation shifts are putting demands on their operations. Choosing a suitable country for shoring activities means finding a partner aligned in its commitment to meeting their sustainable goals.The right partner countries should ideally boast eco-friendly manufacturing processes, energy-efficient infrastructure and a commitment to reducing waste and emissions.