Nearshoring Trend May Be Exaggerated

Oct. 14, 2011
Interest in Asian offshoring is still strong, although Latin America is becoming increasingly popular too.

A recent study by the Tompkins Supply Chain Consortium suggests that nearshoring may be more popular right now as a concept rather than an actual occurrence. Companies aren't pulling their manufacturing out of China and other Asian countries in any significant numbers, the study points out, although more manufacturing is being located in Central and South America.

The study, which examines supply chain trends leading up to the peak holiday season, also suggests that manufacturers are understandably cautious about the state of the economy and consumer confidence. More than 40% of survey respondents say they have lowered the number of SKUs they are producing for the fall. They're also adopting a focused "ABC strategy" to counterbalance out-of-stocks and end-of-season discounts.

"Although there are no clear forecasts for the peak season, companies are doing what they can to brace themselves," observes Chris Ferrell, director of the Consortium. "They need to see a profit, as well as make sure their customers are satisfied." The study respondents indicate that they're relying on improved supply chain integration and personnel experience to get them through the holiday season.

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