Offshoring or Reshoring ?

A few years back, with globalization in full flood “Should I stay or should I go?” was a re’frain heard in many ‘boardrooms as leaders decided whether to ‘offshore’ operations to China, India and other low-cost locations.

In recent times, not only has globalization come under fire but the ‘efficacy of offshoring has been questioned, and the refrain heard now can often be “Should I come back?”

The de’terminants of reshoring are many and complex. There are advantages in localizing the supply chain but there are also significant costs to be weighed before making a decision.

Reshoring can potentially enable firms to manage their production capacity and inventory more e’fficiently and flexibly — allowing production to more closely respond to demand. Also, by reducing communication and transport costs, shortening the supply chain may actually make production cheaper at home than abroad. Furthermore, reshoring can lower the risk of supply chain disruptions and intellectual property theft, and finally there can be marketing benefits associated with manufacturing at home.