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The European Union’s (EU) data regulations have recently gained significant attention, particularly due to the General Data Protection Regulation (GDPR) and the Schrems II rulings. These regulations have led to major changes in data privacy, but they also present opportunities for businesses that can navigate the new landscape effectively.
In a recent webcast, insights were provided on how to simplify the financial intricacies of logistics, from planning through to the invoice process. This approach helps tie together various financial elements to create a more efficient logistical process.
Labour costs, trade regulations, and economic pressures are leading to a major shift in the global supply chain, with manufacturers standing at the forefront of this transformation. A newly released report, “Shifts in the Global Supply Chain and the Impact on Nearshoring,” has identified that even with the rise of automation altering cost dynamics, the decision to nearshore remains intricate.
The ongoing dialogue surrounding globalisation and free trade continues to be a contested issue among scholars, economists, and policymakers. We are now witnessing an emerging trend, spurred by various catalysts and external factors, redefining the comparative advantage equation while balancing it with social and domestic agendas.
Market variations in labour costs, evolving trade regulations, particularly those influenced by automation and technological advances, ongoing economic pressure, and the need to navigate within a complex environment to foster profitable growth all contribute to challenging decision-making for key stakeholders.
A call for in-region production is being made, with a focus on strategic industries related to energy, infrastructure, technology, and security. Policies and incentives are fuelling the argument for positioning facilities closer to home that otherwise might have been placed across the globe. Meanwhile, automation is shifting the financial rationale behind these decisions.
While some locations may still be more affordable based on landed costs, the total cost of ownership (TCO) continues to guide decision-making. Automation that decreases labour reliance and local sourcing of raw materials and components are strengthening the argument for increased nearshoring.
Investments in automation are on the rise. In the U.S. alone, companies invested over $2 billion for nearly 40,000 robots in 2021. This emphasis on automation may serve as the foundation for a domestic manufacturing ecosystem where growing levels of scale can be achieved, and the economics of nearshoring consistently enhanced.
This has been further facilitated by the introduction of several new laws and regulations, including legislative acts focused on infrastructure, inflation reduction, and domestic production. Tariffs imposed in recent years on certain imported goods also play a role.
While some regulations have been in effect for decades, new incentives and stringent requirements for local manufacturing and higher local content are compelling organisations to reassess their nearshoring strategies. These policies should be regarded as key support mechanisms that, in conjunction with automation, can reduce procurement costs and result in savings on tariffs and freight expenses.
The analysis in the report was conducted using a specific platform designed to find opportunities in a challenging environment by mapping the value stream and analysing trade-offs that exist when sourcing locations are altered.
The global landscape may be at the dawn of a nearshoring revolution as the total-cost-and-risks-of-ownership (TCRO) equation in a fragmented supply chain is being reimagined by technological advancements such as AI and automation, along with policies and regulations. It has the potential to leave lasting impressions on the global supply chain across numerous sectors.
The motives driving the case for nearshoring are becoming clear, consistent, and wide-reaching, and the number of industries influenced by it is expected to grow as the ecosystem develops. The need for a robust strategy, effective tools, and real-time comprehensive analysis will remain crucial.
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