The Covid-19 pandemic has undoubtedly disrupted interdependent global manufacturing supply chains. Many of us have by now experienced the effects of our disease-ravaged economy, from product shortages to increased market prices. Although most countries now have the pandemic under control, geopolitical tensions and events still threaten what used to be stable international supply chains, and it’s about time that global manufacturing logistics step up and evolve.
A recent report from Deloitte Insights advises that manufacturers look into the so-called “friendshoring” to rebuild broken supply chains, restore pre-pandemic logistics and bring down manufacturing costs.
What Is Friendshoring?
Friendshoring is just another type of reshoring – that is, the practice of returning manufacturing and services to the domestic economy from offshore facilities and providers. This permutation involves tapping a network of trusted suppliers from friendly countries. One key element of friendshoring is the existence of multiple independent supply routes, thereby improving supply chain resilience while promoting healthy international relations with amicable partners.
Why Reshore and Friendshore?
Friendshoring, and reshoring as a whole, are needed to create a more resilient manufacturing supply chain. Here are the primary reasons for this:
- Interdependent global supply chains are vulnerable to disruption. Unfortunate events like conflicts, bad harvests and regime changes may take a supply node out of the chain, forcing manufacturers to seek alternative suppliers and slowing down production.
- Threats like shipping container shortages, labour market restrictions, and geopolitical tensions with key trading partners can slow down the delivery of necessary supplies.
- Reshoring brings jobs home. This results in lower unemployment and an improved economy that manufacturers will love doing business in. Furthermore, it improves the country’s overall industrial capability useful for a more robust economy and national defence posture.
3 Ways to Friendshore Your Supply Chain
Now, how do you reshore your supply chain through friendshoring? Here are three ways that you should consider:
- Tap suppliers in allied states. Alliances are a good foundation for robust economic, military, and political partnerships. It thus makes sense to prioritise finding suppliers in allied countries. The friendly economic relations and pre established, secure supply routes make for a great recipe for logistical resiliency.
- Look beyond the border. So long as the neighbouring country is not hostile in any way, they make a great base for building a friendshoring network. Manufacturers can take advantage of pre existing treaties between their country and their neighbours, as well as the presence of established logistical routes running through the border.
- Harness connections in friendly developing nations. These countries welcome investment that can create jobs and help them propel their economy forward. On a geopolitical note, this can also help the manufacturer’s country establish a presence in these partner states, helping build stronger international bonds.