Nearshoring key supply chain risk strategy for Euro firms

A new study finds companies see the relocation of orders to neighbouring countries as the best way to increase efficiency, improve flexibility, and shorten delivery times.
Inverto study shows most European businesses see nearshoring as best strategy to mitigate supply chain risk, with Eastern Europe the favoured region

Most businesses across Europe see nearshoring and reshoring as important ways of safeguarding their supply chains, a new survey suggests.

Nearly half (42%) of all companies surveyed rate regionalisation as the primary approach to restructuring their supply chain.

The study was conducted by Inverto, an international management consultancy with expertise in procurement and supply chain management.

It found that companies see the relocation of orders to neighbouring countries as the best way to increase efficiency, improve flexibility, and shorten delivery times.

Two thirds (63%) of the companies surveyed say they plan to restructure their supply chains in the next five years – while a similar number (67%) of industrial companies intend to relocate procurement capacities to more politically stable areas. 

Eastern Europe favoured nearshoring region

Eastern European countries are seen as the best option, with 57% of companies already sourcing goods from that region, while 32% plan to relocate activities to Eastern Europe in coming years. By contrast, just 9% of companies plan to relocate to Western Europe.

In terms of reasons for relocating, nearly all (91%) respondents say geopolitical tension is the main reason, with just 11% optimistic that politics alone can solve global tensions.

Production costs are also rated as a strong influence (82%) for companies looking to restructure their supply chains.

"Nearshoring can unlock potential in three dimensions - increasing resilience, accelerating lead times, and making progress in sustainability," says Inverto MD Sushank Agarwal.

“To maximise opportunities companies should rethink their sourcing strategy, and expand their geographical scope when evaluating 

nearshoring potential.”

Around 95 companies – mainly from Germany, Austria and Switzerland – took part in the study. Roughly half of respondents were manufacturers, while others included those from service, construction, and process industries. 

The findings follow those of a similar study from Capgemini that shows consumer and retail businesses are turning to a mix of nearshoring and domestic sourcing as they seek to strike a balance between cost and resilience, a new report finds.

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