Should we stay or should we go – onshoring and offshoring your supply chain

Offshoring vs onshoring supply chains (inside and outside the EU) – what’s the best option? Together with how businesses are approaching the supply chain and what they intend to invest in over the next three years to boost it.

Should we stay, or should we go? It’s an important question for businesses – particularly so when it comes to managing supply chains. Time and again over the last few years, the movement of goods to and from the UK has come under the spotlight, with the likes of Brexit, a global pandemic, and geo-political unrest exacerbating a growing problem.

Our bi-monthly Rethinking the Economy survey of 500 mid-sized businesses, has highlighted the pressures facing businesses when it comes to managing the supply chain and the latest survey is no different.

In the North West, the supply chain remains the biggest challenge, ahead of rising business costs and interest rates, changing customer habits, and paying down debt piles. The list has a familiar feel to it and the supply chain has toyed with the top spot for some time. So much so, the decision to stay or go is no longer one to push down the road, but a real and immediate consideration.

According to our Rethinking the Economy survey, in the next 12 months 44% of North West businesses will be offshoring as much of their operations as possible in a bid to tackle the issues arising from a battered and bruised supply chain. The priority for regional businesses in the current climate is to foster new relationships in the supply chain to access better incentives and benefits, while also reducing the impact of political and commercial uncertainty in the UK on their business.

Unsurprisingly, businesses are going further to try and bolster their overseas capabilities. This includes moving from transactional to strategic partnerships with supply chain partners, as well as looking to use technology as an enabler to create efficiencies and ongoing optimisation of supply chain processes.

This is a multi-pronged approach, particularly when you consider that an overwhelming 91% of North West businesses admit that disruptions in their supply chain are impacting their business. It’s a sizeable problem and one that requires careful consideration. But, when it comes to the debate of onshoring versus offshoring supply chain operations, what are the key things that businesses need to keep in mind, before packing up and moving their supply chain overseas?

Offshoring your supply chain

There are number of questions you need to consider before embarking on a potential offshoring journey. These include:

• Assessing your current supply chain procedures. Can you avoid the need to offshore by streamlining your UK processes?
• Is there a balance to be struck? Does a blend of UK and offshore operations give you the best of both worlds?
• Ensure you fully consider the complexities of undertaking offshored operations
• Look at whether there are any tax saving opportunities that could increase your profitability.

It’s an attractive proposition for nearly half of North West businesses, but does carry both pros and cons. The key to an effective supply chain can often lie in high quality data, excellent planning, robust SLAs with key partners, full accountability, and clear oversight and management. If you would like to discuss the blog, or the value of a supply chain/value chain health check, contact me on (0)7795 926232 or email Stephen English.