Nearshoring
Definition
Nearshoring is relocating sourcing or production from distant countries to ones closer to the end market, while reshoring brings it back to the home country. Both aim to shorten lead times and reduce supply chain risk.
In Practice
The offshoring wave of the 1990s and 2000s chased low labor costs, accepting long lead times as the price. That math has shifted: rising wages in traditional low-cost countries, volatile freight rates, tariffs, geopolitical tension, and the demonstrated cost of disruption have made proximity valuable again. Nearshoring, such as US companies moving production to Mexico or European firms to Eastern Europe and Turkey, captures much of the labor saving while cutting ocean transit from weeks to days.
For planners, shorter distance changes everything downstream: lead times shrink, so forecasts are needed less far ahead and safety stocks fall; smaller, more frequent replenishment becomes economic; and reacting to demand shifts mid-season becomes possible. These working-capital and agility gains often offset a higher unit price.
The honest comparison is total cost of ownership including freight, duties, inventory, obsolescence, and risk, not factory price. Fashion retailers producing trend items in Turkey for Europe while basics stay in Asia illustrate the blended answer most companies reach.
Related Calculators
Related Terms
Total cost of ownership (TCO) is the complete cost of acquiring and using a product or supplier over its life, including price plus freight, duties, inventory, quality, risk, and end-of-life costs, not just the purchase price.
Supply Chain ResilienceSupply chain resilience is the capacity to anticipate, absorb, and recover quickly from disruptions such as supplier failures, natural disasters, or demand shocks, while continuing to serve customers.
OutsourcingOutsourcing is contracting an external provider to perform activities previously done in-house, such as manufacturing, warehousing, transportation, or planning. It trades direct control for cost, flexibility, and access to specialized capability.
Supply Chain Network DesignSupply chain network design is the strategic process of deciding the number, location, size, and role of facilities such as plants, warehouses, and cross-docks, and how product flows between them. It sets the structural cost and service capabilities of the chain.