One of the hottest purchasing buzzwords this year is “reshoring.” I’ll define reshoring as “the act of beginning or resuming to purchase from domestic suppliers those products or services that were previously purchased from foreign suppliers.”
Sites such as Evolving Excellence, the National Tooling Machining Association, the Huffington Post, and several others have featured material on reshoring this year. Most of these sites focused on reshoring initiatives being fired up by American corporations.
But the grass is green on the other side of the border as well. Can you guess who else is engaging in reshoring?
Well, in reading a New York Times article entitled “Mexican authorities make record drug bust, seizing 105 tons of marijuana” from earlier this week, I learned that Mexican drug cartels are apparently jumping on the reshoring bandwagon as well. According to the article, “Although Mexican drug cartels smuggle marijuana from South America, the drug is increasingly produced in Mexico. Cannabis production in Mexico increased 35 percent to 12,000 hectares (29,652 acres) in 2009, from 8,900 hectares (21,991 acres) the previous year, according to the U.S. State Department’s 2010 International Narcotics Control report. The report attributed the increase to drug cartel efforts to ‘diminish reliance on foreign suppliers.’”
If you’re in a fog as to how reliance on foreign suppliers can be any different than reliance on domestic suppliers, I think Jason from Spend Matters did a good job quickly summarizing some of the additional risks organizations face by offshoring in his recent post entitled “Bringing Spend (and Production Back Home) — An Economic Case for Re-Shoring.”
Having written all of that, here’s my opinion. Find the right supply base for each category of goods/services without any predisposition as to whether domestic or global sourcing is the right move. Certainly there are benefits and drawbacks – risks and rewards – to each. Sometimes, the rewards justify the risk of choosing one over the other. But you won’t know without an educated approach.
So before you conclude that reshoring is the way to go because “everyone’s doing it,” take a deep breath and really think about it. Good opportunities can be wasted if situations aren’t thoroughly evaluated.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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