Manufacturers Expect Near-Sourcing To Increase

According to new research from LMA Consulting, 70% of manufacturing executives say near-sourcing will grow within the next five years.

Seventy percent of U.S. manufacturing executives expect near-sourcing to increase within the next five years, according to a new study by Lisa Anderson MBA, CSCP, president of LMA Consulting Group. The survey was conducted to better understand outsourcing, near-sourcing and insourcing trends for U.S.-based manufacturers. Since data for the survey was collected from August through October, 2016, the U. S. presidential election may have an impact on this trend toward near-sourcing.

Lisa Anderson MBA, CSCP
LMA Consulting Group

“I’ve seen that manufacturers were already considering insourcing to the U.S. and near-sourcing options to Mexico and other closely located countries because of the Amazon effect – the need for rapid response to customer needs,” said Anderson. “Thus, the industry was already moving in that direction prior to the U.S. presidential election. However, since tariffs are likely to increase and bad publicity could easily occur, the impact will probably steer some of those companies towards the U.S. instead of Mexico.

“In addition to the Amazon effect, I’ve witnessed a number of companies who poorly planned their outsourcing and off-shoring efforts,” she added. “They now have experience and data to make better decisions. Since the total cost of importing non-commodity products from Asia is equalizing with what can be achieved in the U.S. or Mexico, near-sourcing becomes a no-brainer when the customer and cash impacts are added to the cost equation. It is also far easier and more successful to communicate and manage when manufacturing is closer to the markets served.”

This is the third major research study conducted by LMA Consulting Group, including a Skills Gap Study and The Amazon Effect research project. With an increase in manufacturing and continued concerns of the lack of skilled resources to fill new manufacturing jobs, Anderson is initiating a new Skills Gap Survey to assess the necessary skillsets for manufacturing positions. The data will be used to uncover new issues as well as compare and contrast results from 2013. Take the survey here.