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Shortening supply chains and moving operations closer home are objectives on the minds of a majority of executives in 2024, with a whopping 81 percent reporting that nearshoring<\/a> and onshoring are integral to their future plans.<\/p>\n <\/p>\n <\/p>\n That figure has grown by 18 percent over the past two years, according to newly released research from Bain & Company. The group\u2019s biennial survey of CEOs and chief operating officers showed a rise in companies planning\u2014or already engaged in\u2014shaking up their sourcing mix to include nearby or domestic markets.<\/p>\n <\/p>\n <\/p>\n We\u2019ve heard about these trends before; nearshoring, reshoring and onshoring <\/a>became inescapable pandemic-era buzzwords, but as of yet, they haven\u2019t led to the crumbling of the sourcing world order. However, there are a confluence of factors now driving executives to divorce themselves from the status quo of the past three decades, according to Bain partner Hernan Saenz.<\/p>\n <\/p>\n <\/p>\n The global head of the firm\u2019s performance improvement practice said a combination of economics, questions about supply chain resilience, new regulations and incentives and uncertainty about consumer behavior are driving decision-makers to confront the \u201cmagnitude\u201d of the shifting sourcing landscape.<\/p>\n <\/p>\n <\/p>\n In 2024, 64 percent of executives report that they\u2019re actively making investments in shaking up sourcing, Bain\u2019s data showed. Nearly half (46 percent) of the 166 execs surveyed said they were looking into \u201csplit-shoring,\u201d the firm\u2019s terminology for developing offshore, nearshore and onshore sourcing, while 18 percent said they were gung-ho about developing a nearshore supply chain. Just 36 percent of C-Suite leaders said they were investing in offshoring moving forward.<\/p>\n <\/p>\n <\/p>\n Even prior to the pandemic, economics were already driving companies to explore markets outside of China for sourcing, Saenz said. \u201cWe created massive demand on a big, but fixed, labor supply, and that created a wage increase,\u201d he told Sourcing Journal. Companies began looking to other markets in Asia and Latin America to cut costs, beginning the \u201cChina-plus-one\u201d trend that took shape throughout the 2010s.<\/p>\n <\/p>\n <\/p>\n Covid poured fuel on that fire\u2014and it also created a sense of fear about future supply chain resilience that persists to this day, he said. \u201cPeople realized that recovering with a very long supply chain is super hard,\u201d he said. \u201cThey started saying, \u2018In a world full or turbulence, I\u2019m going to need to have a shorter supply chain, and have supply chains closer to my end markets.\u2019\u201d<\/p>\n <\/p>\n <\/p>\n Throughout two administrations, the U.S.-China enmity has deepened, leading to both new regulations\u2014like the Section 301 tariffs<\/a> on China-made goods\u2014and incentives, like President Joe Biden\u2019s CHIPS and Science Act and Inflation Reduction Act<\/a> (IRA), that have pushed companies to examine their future-looking frameworks for sourcing. Bain\u2019s research showed that U.S. businesses (which made up 39 percent of surveyed companies) were incentivized to reshore by the IRA, which offers subsidies and tax credits to boost domestic manufacturing for critical sectors like semiconductors and clean energy.<\/p>\n <\/p>\n <\/p>\n The U.S. trade relationship with China isn\u2019t the only geopolitical factor influencing companies to explore new production markets. The firm\u2019s study showed that the appetite for reshoring has also been underscored by international trends toward deglobalization, characterized by more localized production, protectionism and border controls.<\/p>\n <\/p>\n <\/p>\n One-quarter of company leaders saying they\u2019re looking to reduce dependence on China due to concerns about the decoupling of economic blocs across the world. Nearly 70 percent of international executives said they\u2019re making moves to shift operations out of China as a result.<\/p>\n <\/p>\n <\/p>\n Meanwhile, consumers started to take notice, perhaps for the first time in decades, of where the products they were buying were produced. \u201cNow, super interestingly, you even started seeing a little bit of economic nationalism, not only political nationalism,\u201d Saenz said.<\/p>\n <\/p>\n <\/p>\n With President-elect Donald Trump promising to raise tariffs<\/a> on products made in China by 60 percent to 100 percent during his first 100 days in office, the Bain partner said these trends will likely continue with a vengeance. The rhetoric that\u2019s permeated the airwaves throughout the past six months already has companies scrambling to rearrange their sourcing matrices before the new Commander in Chief is sworn in.<\/p>\n <\/p>\n <\/p>\n