Reshoring to Combat Global Supply Chain Disruptions

While Covid-related restrictions have been largely lifted and the world is returning to a new normal, the impact of the pandemic on manufacturers’ supply chains is not likely to go away any time soon. The pandemic, along with high gas prices and the ongoing conflict in Ukraine, has led to supply chain disruptions that will continue to affect manufacturers.

Not only does this hit the bottom line, but it also creates inventory management issues, as manufacturers have seen longer lead times for receiving raw materials. The impact has been felt both domestically and internationally, but with the additional costs and challenges associated with international supply chains, many companies have begun to place a focus on sourcing materials from domestic suppliers.

The U.S. has not been immune to supply chain disruptions, and many American companies are finding that there’s more uncertainty and additional cost associated with relying heavily on offshored materials. The low supply of available shipping containers has created additional unpredictability for manufacturers, along with a significant increase in costs. When coupled with consistently high gas prices, it’s made domestic sourcing a more attractive option.

Per the Oden Technologies 2021 State of Manufacturing Report, 45% of all survey respondents said they were planning to reshore parts of their supply chain, and 58% were planning to add additional suppliers to meet their raw material needs. Survey respondents cited costs, as well as a desire to reduce risk within their supply chains, as the primary reasons for reshoring. With costs of shipping containers and gasoline remaining high, these trends are expected to continue through 2022. 

Supply chain issues will continue to be a challenge for manufacturers going forward, but the current situation could also provide opportunity. Increasing the number of suppliers and moving more of the supply chain back to the U.S. would give manufacturers greater control over their supply chains and protect them from any future disruptions that may happen overseas. Plus, if the reshoring trend continues, the U.S. economy as a whole would benefit. Domestic suppliers would see increased business, which will lead to job creation. 

The pandemic has forced companies to reevaluate the way they do business, and many manufacturers are making significant changes to their supply chain as a result. Reshoring is one way that manufacturers can stabilize their supply chain to reduce costs and increase predictability. 

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