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What is Reshoring?

Reshoring, or onshoring as it is sometimes known, is the practice of returning work which was previously offshored/ outsourced and this can happen for a number of reasons, whether for financial, quality or ethical purposes.  The first industry to do so was telecoms with numerous call centres returning to the UK due to popular consumer demand because of perceived low quality, and now the manufacturing industry is following suit. 

Why are companies reshoring?

Due to increasing Asian labour rates, consumer demand for ethically produced goods and the subsequent exposure of exploited workers working in poor conditions there has been an increase in work being returned to domestic markets throughout the world with the USA leading the way. There has also been a change in the relationship of consumer perception of value and quality which has led to a resurgence in demand for domestically manufactured ‘higher quality’ goods. The ‘Made in Britain’ standard is also making a comeback with consumers willing to pay a premium price for these products based on the perceived higher quality of item.

Baxter Robot packing boxes

How are customers affected?

Consumers have for the most part been the influencing the reshoring trend by demanding better quality and value for purchases and continued brand loyalty. With the increasing dissemination of information freely available through the internet power has slowly been returning to consumers who have for many years had no other option or a way to express their opinions. Customers are often more inclined to buy products which have a shorter lead time which is often a result of bad experiences with companies which have offshored.

How can businesses be affected?

Numerous businesses have fallen foul of the power of social media, what was a single customer complaint can quickly turn into an expensive PR nightmare. From reduction of brand loyalty and brand boycotting to stock devaluing and shareholder loss the effects of ignoring consumer demand can be disastrous for businesses. By returning manufacturing to domestic markets businesses can take back control of their supply chain, be more reactive to consumer demand and reduce the risk of intellectual property and trademark theft.

Calculating savings by reshoring

Harry Moser created The Reshoring Initiative within the United States so that companies could better understand the true cost of offshoring to their business. Harry states, “American companies often don’t consider all of the costs involved in sending their manufacturing offshore, such as inventory carrying costs, travelling costs to check on suppliers, intellectual property risks and opportunity costs from product pipelines being too long.” 

When is the right time to start reshoring?

Now is a great time to start reshoring, with increasing overseas labour costs and increasing consumer demand for domestically produced goods the reasons for reshoring are only going to multiply. Businesses who get ahead of the curve can create themselves fantastic opportunities by becoming market leaders in their field by bringing work back home. There are fantastic low cost smart, collaborative robots, such as the Baxter robot, which can provide ROI in as little as 12 months!

Active8 Robots can provide businesses with a low cost robotic solution whether to reduce costs, improve efficiency or to increase productivity. Get in touch with us about how we can help reshore your business.

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