5 factors that might be preventing you from tapping into the reshoring trend

5 FACTORS THAT MIGHT BE PREVENTING 
YOU FROM TAPPING INTO RESHORING

The reshoring trend, primarily driven by large manufacturers, has been gaining momentum in recent years. It represents a major opportunity for businesses to re-establish their industrial processes closer to home – but you might be nervous about winning new business because of the daily challenges you face. 

It’s important to remember that these challenges are shared by most of your industry peers, at least to some extent. That doesn’t mean that you can’t benefit from the reshoring trend – in fact, it’s a chance to grow and future-proof your business. 

We’re seeing more firms making strategic investments in skills and technology, which puts them firmly in control of their operations, and is already helping them to attract new domestic customers and gain a competitive advantage. 

Here, we look at some of the factors that could be standing in your way of trying to win new contracts – and how you can overcome them. 

1. Worker shortages

Ongoing labour shortages are impacting nearly everyone in the industry, exacerbated by an ageing workforce, Brexit, and the lasting impact of the COVID-19 pandemic.

Earlier this year, the House of Commons reported details of a survey conducted by the ONS in November 2022. It revealed that 13.3% of businesses in the UK reported experiencing a shortage of workers. 

This isn't just a UK issue. By November 2022, more than 30% of EU building contractors could not complete all their work because of personnel shortages. 

Additionally, a quarter of the 25 million SMEs in Europe say hiring good quality managers and staff is their biggest concern. Last year, the vacancy rate in the EU was 2.8% – which is now higher than pre-pandemic levels in most member states.

Reshoring is the perfect opportunity to develop the skills of your current and future workforce, creating high-quality well-remunerated jobs. There may be opportunities to work with OEMs to build skills via their training academies, giving people access to cutting-edge technologies. 

Look for ways to attract the next generation of talent via partnerships with schools and colleges, and see if you can secure funding for in-house training initiatives. 

2. Inefficiencies

Inefficiencies in industrial processes can lead to increased costs, impacting the competitiveness of reshoring initiatives. These often result from outdated equipment, inefficient factory layouts, and overly complex supply chain structures. 

Supply chain technology offers the visibility needed to streamline long-standing inefficiencies. With relevant business insights available in a central location, staff immediately save time because they are not keying data into different systems – and with better visibility of your operations you can see where resources are being over or under-utilised. Addressing these helps you to reduce overheads, and either pass the lower costs onto your customers or improve profit margins. 

3. Low productivity

This remains a significant hurdle for businesses looking to reshore their operations or win new contracts. A government report released in 2022 suggested that the UK suffered from comparatively lower productivity levels than some of its global counterparts. 

In fact, compared to other G7 countries, the contribution of capital deepening to labour productivity growth in the UK has been weak. At the same time, labour productivity per hour worked in the EU grew by 0.7% in 2022, maintaining a growth trend even during the COVID-19 pandemic.

Once again, supply chain technology offers a solution to this – without inefficiencies holding them back, teams can get more done and increase output. 

What’s more, using the latest industry systems is a powerful motivator for people, especially younger employees who are likely to be frustrated and demotivated by time-consuming and old-fashioned manual processes. 

4. Scalability 

SMEs may struggle to scale their production quickly in response to fluctuating demand, potentially leading to missed opportunities and customer dissatisfaction. However, with good planning, you can be both agile and efficient when orders come in. 

Supply chain technology can support you in both of these areas, helping you to adapt production to changing demand patterns with ease. By integrating operations with your ERP, you can optimise resource allocation and respond effectively to market fluctuations.

5. Sustainability 

While bringing supply chains closer to home reduces mileage, manufacturing processes can still have significant environmental footprints. Waste is one of the biggest issues – and is often caused by poor planning and processes that result in overproduction or defects.

The sustainability requirements of OEMs might also feel like a barrier to smaller firms, who generally don’t have the resources for consultants or on-site renewable energy sources.

But improving sustainability doesn’t have to be costly or time-consuming, and could bring wider benefits to the business. Eliminating waste, consolidating orders to reduce mileage, and optimising production are all good practices that save energy and resources. 

Discover how Forterro’s ERP products could help you overcome the most common barriers to reshoring.