Learn what Maersk, Reuters and industry leaders are saying about near sourcing.Electronic supply chains have faced several disruptions in the last few years. From shifting trade policies, geopolitical tensions, rising energy costs, to regional shutdowns and components shortages, the industry has had to reinvent itself constantly to keep up with the accelerated pace of change. One of the recent developments resulting on this, is that companies are looking at a wider variety of locations to move their sourcing closer – from low-cost manufacturing destinations like Vietnam and India to regions that are closer to European key markets like Turkey, Germany and Poland. These factors are now bringing a wave of new investments into near sourcing facilities in Europe, North America and their free trade partners, alongside emerging hotspots in Asia. However, there are several aspects to keep in mind during reshoring efforts to find a sweet spot that mixes labour, infrastructure and stability to ensure the long-term viability of a site, both from productivity and sustainability angles.
A new wave of change is coming with reshoringAccording to a recent survey we conducted with Reuters, 67% of participants, who are global technology retailers and manufacturers, had already changed their material and component sourcing locations. This research confirms the trend of redistributing supply chains to a wider variety of countries in order to achieve a combination of additional security, reliability, speed to market and sustainability. These countries are located mostly in Europe and North America, along with periphery options like Turkey and Mexico.
The need for change in the technology industryThe electronics industry has perhaps been the most volatile in the recent past. In the previously mentioned survey, 100% of respondents belonging to the industry said that they had faced delays in sourcing components or finished goods. The friction in the market has led to aggressive change in terms of where the tech goods are sourced from. The impact of this has been felt in several industries, including consumer electronics, healthcare, renewables and automobiles. Another reason for moving sourcing locations is the uncertainty in far-off markets like China. Unpredictable conflicts between countries or government regulations, for example, could cause shortages of electronic components and have a catastrophic effect on every facet of a global economy. So, in the face of geopolitical changes, there is a need for rewiring the electronics and technology sectors. The process is now being supercharged as governments increasingly see chips and electronics systems as vital underpinnings of national industrial strategies and security. All of this predictably comes with its own set of challenges. As sourcing locations move closer to markets in Europe, the skills needed, the high levels of investment, the long timelines and the need for substantial supporting infrastructure mean that any change needs to be carefully considered and be well planned.
Building resilience with reshoring and nearshoringAs mentioned, foremost among the shifts in the industry is the movement to a wider geographic spread of locations for both manufacturing and sourcing to reduce the possibility that a single event could knock out all downstream production. This is being done as an insurance mechanism against the kind of instability we have seen in the recent past, but also to be able to rapidly fulfil consumer needs, reduce transit times and lower exposure to Environments, Social and Governance (ESG) issues. The key takeaway is that near sourcing can help you build a resilient technology supply chain that keeps you ahead of the game even in the face of constant disruptions.
Interested to learn more? For more detailed insights regarding trends and challenges in the industry, read the whitepaper, ‘Rewiring electronics and technology supply chains for a resilient future,’ created by Reuters, in partnership with Maersk.
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