Reshoring has been one of the tremulous buzzwords of 2021. With global supply chains still reeling from the pandemic, domestic companies are looking for ways to exercise more control over upstream operations. Reshoring is being touted as a way to bring reliability, expedience and transparency back to supply chains as companies seek to rebuild.
Unfortunately, reshoring can’t and won’t happen overnight. It demands a forward-looking mindset and executive leadership that’s mission-focused far into the future. Forging relationships with new suppliers closer to home will take time—a precious commodity that many companies feel short on already. These companies are looking to supply chain executives to become stewards in transitioning value streams back to U.S. shores.
Here’s a look at expectations for executive supply chain leadership as reshoring gains momentum, and what companies should expect from c-suite governance.
Identify and clear reshoring hurdles
For companies facing beleaguered supply chains, it’s important to identify the specific struggles creating downstream bottlenecks. Rising rates? Lack of material availability? Unreliable delivery schedules? Unsavory contract terms? Whatever the problem(s), supply chain leaders need to specifically identify them.
Some of these issues are universal—the high cost of materials for example. Bringing supply chains home isn’t going to reduce material costs. If anything, it may temporarily increase them. It’s up to supply chain leaders to identify and act on long-term opportunities. For instance, if reshoring raises the cost of raw materials, does it decrease intermodal transport costs by an amount that offsets the price increase?
Other hurdles to reshoring are specific and addressable based on the situation. For example, reshoring can give a company the chance to consolidate multiple global suppliers into one domestic partner, or vice-versa.
Companies need to approach reshoring with a mind for recreating supply chains that are built for the future—better able to withstand the volatility of today’s (and tomorrow’s) economic uncertainties.
De-silo supply chains and integrate with operations
Looking at supply chains from purely a supply point of view is no longer a viable way to structure operations. The age of de-siloed supply chain operations is upon us. It’s not just about looking at every incremental link in the chain of custody—rather, it’s about correlating supply chain with other facets of business to create synergies.
Reshoring has the potential to make this process simpler. As supply chains orient closer to home, it becomes easier to visualize them in context to operations. It’s much easier to get a real-time look at the status of freight moving across the country as opposed to around the world. Moreover, it’s easier to adapt and pivot as better information becomes available. By combining sales, inventory, transport and supplier information with robust forecasting and modeling tools, it’s possible to rebuild supply chains stateside with better visibility.
Executive leadership is paramount
For many companies, bringing supply chains back to domestic soil represents a total shakeup to core operations. It’s a daunting prospect that many companies will avoid at all costs. Smart companies will recognize the risk and defer to executive leadership to shepherd the company through. Hiring supply chain executives to be stewards means cultivating and following a mission-driven plan designed to re-stabilize core operations quickly. It also means identifying leaders with a complete understanding of supply chain ops.
Executive leadership needs to be proactive—not reactive. Companies that wait for supply chain uncertainties to force their hand will find themselves behind the rat race to rebuild supply chains domestically. Acting before it becomes imperative gives companies a much-needed buffer to transition. Leadership needs a plan to phase the shift incrementally, to maintain operations while also facilitating necessary change.
Behind the scenes, companies participating in reshoring efforts need to give supply chain experts the benefit of the doubt. The shift back to familiar shores requires cohesion between supply chain and all other critical business lines, including finance and operations. Unanimous buy-in and believe in a common set of goals is key in easing the transition.
Reshoring will take time
Too many companies cite uncertainties or obstacles to reshoring. What they’re neglecting to account for are the uncertainties and obstacles growing ever more present within traditional supply chains. Rising prices. Material shortages. Transportation delays. They’ll all persist within the current environment. Choosing to try and outlast them means subjecting the company to the same fears that come with taking proactive action.
Reshoring supply chains will take work, and will bring every company unique challenges along the way. It’s important to understand those challenges and anticipate solutions to them. Even more important is engaged executive leadership with a mind for supply chain orchestration. Reshoring is a process that starts at the top.
About the author
David Magnani is a Managing Partner for M&A Executive Search and Consulting. He has worked in professional services leadership roles for 25+ years, serving a broad range of industries, including supply chain. Since 2014, Mr. Magnani has focused on providing clients the expertise they need to advance their businesses via national executive search, placing interim executives or through expert freelance consultants.
