On-Shore, Re-Shore, Near-Shore

The shelves at stores have gaps of emptiness, it’s difficult to find items that were once in abundance in the US (shoes, furniture, the list is long), freight costs have and continue to increase exponentially, and it’s getting harder and harder to get bookings out of China for containers.

Even in the ‘best of times’ ordering from overseas created heightened complexity and risks. There is no way around a lack of agility when lead times must account for manufacturing time PLUS ocean freight PLUS port release/customs PLUS truck or rail to final destination. Add something like a final build out elsewhere and lead times could easily extend into half a year on a good day. All that and if your demand spikes or tanks- there is little recourse to adjust.

But now. WHOA, now. Companies that want inventory on time must be buying, planning at minimum 9 months to a year out. With extreme weather and unplanned shutdowns ever more likely, the amount of inventory a company must plan and buy is high risk. One new account or door expansion and look out backorder! Or- as we are seeing with Halloween and Christmas inventory JUST arriving to the stores, delayed timing equals excess inventory and huge markdowns, decreased margins, and potential harm to the brand overall.

Tough tough tough.

The discussion around aligning location of supply to location of demand is not at all new but it’s gaining in intensity. Concepts of re-shoring (bringing production back to country of sale) or near-shoring (moving production close to country of sale) are being discussed and even actioned in this wild pandemic world.

Costs can be completely prohibitive still though. Even with all the issues and risks of missed sales and excess inventory (and all the pre-existing issues of sourcing so far from demand), many companies cannot afford the costs to produce domestically.

So then - how can manufacturing domestically (wherever domestically is for a company that typically sources overseas) be made affordable? There is so much to consider and change and innovate to accomplish this. It’s a huge undertaking and, of course, an incredible opportunity happening at exactly the right time.

As Jim Rohn said,

“If you really want to do something, you’ll find a way. If you don’t, you’ll find excuses”