Reshoring Could Take Years

Reshoring is a strategy that sees manufacturing brought back within a country’s borders from overseas and he expected that the supply bottlenecks continue through 2024 at least.

According to Duncan Scott he is a Senior VP of Strategic Sourcing and Quality in New balance company . New Balance is an American sports footwear and apparel brand that was established in 1906 their revenue in 2018 was about 4.5 billion USD. He said that “Nearshoring and reshoring could take decades to implement as a response to ongoing supply chain disruption”

Reshoring is a way to mitigate risk in supply chain

Electronics companies such as Samsung are committed to reshoring  as a way to protect against future disruption of the microchip supply chain. like Samsung and much of New Balance’s manufacturing centers are in Asia, with seven out of 10 of its global production hubs located in this region. It would take years if not decades for that infrastructure to grow to relocate these hubs inside the original country. “on shoring does have value for the fashion oriented product in particular or if you have unique products.”

New Balance facing shipping delays of up to four weeks

Scott revealed that it can take up to four weeks for the company to book a space on a ship instead of few days before the pandemic. He added that the transit time between the key source countries in Asia and the key markets in Europe and North America is about 20 and 45 days and shipping costs had increased hugely, from around $1,700 to $22,000 to ship a container from Asia to the west coast of the US. He went on to explain the company has responded to ongoing supply challenges by:
• Reducing product development time and adjusting calendars
• Ramping up production in manufacturing plants closer to key markets, such as in the US and UK
• Redistributing production across locations with fewer pandemic restrictions, such as Indonesia.

Strategic sourcing is way to offset inflation
He said: “Certainly we’re seeing material prices going up but we cannot pass all of these costs on to our consumers. So that puts a squeeze on profits. But the whole nature of the work that we do, especially in sourcing and operations, is trying to find ways to mitigate ever-rising costs. “On the factory floor, there’s a lot of running room for increasing efficiency to offset rising material costs.”