Anticipated global trade regulations and geopolitical instability have caused most electronic contract manufacturers (ECM’s) to rethink advanced supply logistics that bring final production closer to end customer markets.
We’ve learned traditional offshoring labour cost advantages are often minimized with time zone communication delays, transportation fees? expenses?, restrictive lead time, excess inventory and documentation errors; resulting in lost business and/ or customers.
Reshoring manufacturing closer to end customer markets has gained traction in recent years due to rising offshore labor costs, advancements in automation, and the need for a more resilient supply chain. However, reshoring with much higher production costs will not solve end customer requirements.
Right-Shoring: advanced supply planning
Competing with final assembly and testing in local markets requires astute sourcing of component bill- of- materials (BOM) and staging of electronic devices (as needed) from technically optimized supplier locations.
Leadership in advance supply planning requires real-time project alignment of supplier interdependencies, where agile, talented teams balance technical sourcing risk with commitment dates to effectively serve changing customer needs.
Our experience in managing/accommodating/ responding to? evolving c smartphone demand in Europe and North America from eight ECM locations (Flextronics, Jabil & Celestica) for Research in Motion with two Sanyo battery hubs ($100M annual ~$5 Li batteries), provides the framework for NavRightShoring.
Lessons learned:
- Prioritize key markets: improve customer response time to market and service delivery.
- Optimize cost-benefit ratio: balance savings, quality, efficiency, and supply chain resilience.
- Improve flexibility: allocate skilled technical resources to qualified locations.
- Enhance risk management: evolve with geopolitical instability and trade restrictions.
- Simplify decisions: address cost structures, trade regulations, labour and logistics.
- Manage change: educate all stakeholders, especially when relocating jobs.
- Coordinate locations: communicate in real time across different regions.
Conclusion
There is no universal answer when it comes to choosing between offshoring, reshoring, and right-shoring. We characterize offshoring as cost-saving, reshoring as cost-acceptance and right-shoring as a strategic balancing act. By carefully evaluating costs, efficiency, risks, and long-term business objectives, we can begin to make informed decisions that align with market conditions in an ever-changing global economy.
Right-shoring is complex but well worth the effort and offers competitive advantages – from managing a dynamic ecosystem of technical accuracy, regulations, logistics, and real-time coordination that deliver unparalleled customer value.
In the case of electronics manufacturing, right-shoring is particularly complex due to global supply channels, logistics, BOM component shortages, approved alternates and rapid product innovation cycles.
Advance supply planning with CNavRightShoring enables small teams to compete with larger organizations by getting the strategy right the first time. The formula includes global supplier- partner communication with staged design and production milestones that simplify alignment with end customer market opportunities.
The result? Small teams, big impact. Join us in transforming the way advanced teams balance supply with demand, unlocking mutual lifetime value with strategic partners.