Headed Home: The Role of Proximity in On Shoring

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Reshore Now
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Stock Keeper
Re: Reshoring and Proximity to Customers
Reshore Now   4/22/2014 9:58:01 PM

Thanks Hailey for your interest in the Reshoring Initiative www.ReshoreNow.org

I believe the miscalculation came from a couple of angles. First, there was a kind of herd mentality that when companies saw their competition offshoring, they felt they would have to offshore as well, in order to remain competitive. However, many times this was not the case.

Also, many times they were considering only the labor costs and ignoring the 29 other costs that need to be considered in order to get the total cost.

Plus, the companies were not considering all of the hidden costs of offshoring such as intellectual property risks, long unstable supply chains, loss of innovation etc.

Hailey Lynne McKeefry
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Re: Reshoring and Proximity to Customers
Hailey Lynne McKeefry   4/22/2014 7:42:40 PM

@Reshore now, thanks for the link to the calculator. I'm interested in teh high number of miscalculations. What do you think is responsible for the majority being mistaken? Were there costs and elements of the calculation that were often missed? Or were there miscalculations on how expensive? I'd be interested in your take on what's behind the huge gap between the calculations and reality...

Rich Krajewski
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Supply Network Guru
Re: Reshoring and Proximity to Customers
Rich Krajewski   4/22/2014 12:26:40 PM


Hope there aren't any Trojan horses on that website, being posted anonymously like that and all.

Reshore Now
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Stock Keeper
Reshoring and Proximity to Customers
Reshore Now   4/22/2014 12:13:54 PM

Many companies are reshoring because they are finding that having manufacturing near customers gives them better flexibility to respond to customers changing needs, eliminates higher shipping expense, minimizes supply chain disruptions and eliminates the larger production runs and inventories associated with long distance offshoring.

Companies are also finding that when manufacturing is moved next to engineering, they can improve design, eliminate waste, improve quality and increase productivity.

In the past, as many as 60% of companies made the decision to offshore based on miscalculations, never taking into consideration the total cost of ownership (TCO) including all of the hidden costs and risks of offshoring.

Current research shows many companies can reshore about 25% of what they have offshored and improve their profitability simply by using TCO (total cost) instead of price to make their decision.

25% is equal to 1 million jobs!

In order to help companies decide objectively to reshore or offshore, the not-for-profit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm

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