Reshoring - considerations for CEOs in the manufacturing sectorFollow @PwC
"Have you got anything on reshoring?" I was asked a couple of weeks ago by a journalist from a highly respected UK national. It certainly got me thinking. What with the 'fracking' revolution, the switch in China from export to domestic consumption, and the acceleration of manufacturing innovation - why is reshoring not at the top of every manufacturing CEO's agenda?
Well it might make for a good story, but CEOs have an awful lot on their plates these days. Yes, PwC’s 16th Annual Global CEO Survey found that 46% of CEOs in the manufacturing sector identified their top investment priority as 'operational effectiveness’. But 45% also ranked R&D and innovation, and 43% were looking to invest in growing their customer base. As highlighted in PwC's recent report, Preparing for Growth, CEOs have to plot a course that allows them to maintain a competitive edge, but also to achieve growth.
The operational footprint (e.g. the manufacturing, supply chain and distribution functions) of a manufacturing company is often complicated. Reshoring may work better for some products or for particular geographies. However, manufacturers need to be agile and, while low-cost sourcing may give way to partial reshoring, I see it only as a part of the bigger picture.
Before reshoring is chosen as a preferred strategy, CEOs should be asking how it fits within the wider strategic context of globalising operations and whether it can sit harmoniously alongside low-cost country sourcing and manufacturing.
The big question for me is not whether you should or shouldn't implement a reshoring strategy, but how you can use reshoring in tandem with your existing global footprint and supply chain strategies.
Mark is an experienced director in PwC UK's consulting practice and has led a number of large programmes in the manufacturing sector. He specialises in helping manufacturers with the design and implementation of changes to their operating model, particularly within the areas of value chain transformation and operational improvement.