High-tech interest in nearshoring grows, but some skepticism remains
Although the number of companies considering relocating their manufacturing facilities closer to consumers has increased, three out of four still plan to stay where they are, a UPS survey finds.
High-tech companies are becoming increasingly interested in nearshoring as a way to bring production closer to where products are sold and consumed, according to the fourth annual global UPS Change in the (Supply) Chain survey conducted by IDC Manufacturing Insights. Nearshoring involves the relocation of factories to countries near a major consuming market. The interest in nearshoring marks a shift away from the dominant manufacturing strategy of the past three decades, which focused on putting plants in the country with the lowest costs.
According to this year's survey, interest in nearshoring among supply chain chiefs has tripled in comparison to the 2010 survey. Twenty-seven percent of the survey takers said they were embracing nearshoring as a strategy.
Of those interested in nearshoring, 77 percent said the main factor was a desire to improve service levels by bringing production closer to demand. Another 55 percent said nearshoring improved control over quality and intellectual property.
Despite the uptick in interest in nearshored production, 73 percent of respondents said they had no plans to adopt this supply chain strategy. When asked why, 50 percent in that group said the cost benefit of manufacturing in low-cost countries like China remained compelling. Another 46 percent said the location of key suppliers remained a barrier to nearshoring.
To gather the results, IDC surveyed 337 senior supply chain executives at high-tech manufacturers in North America, Europe, Asia Pacific, and Latin America. The survey results represented a cross-section of companies with revenues over $5 million; 47 percent of the responses came from companies with annual revenues in excess of $1 billion. Another 22 percent came from companies with annual revenues between $250 million and $1 billion, and 31 percent hailed from enterprises with revenue between $5 million and $250 million. Interestingly, the study found that the companies most interested in nearshoring were either very large (companies with sales over $1 billion) or very small (companies with sales between $5 million and $250 million).
The survey also looked at three other key issues in supply chain management: the role of customer service, product lifecycle management, and serving emerging markets.
Customer service: The study found that many companies are shifting the primary focus of their supply chains from the product to customer service. The researchers call these types of supply chains "customer-centric." Thirty-nine percent of surveyed executives said their supply chains are built to be primarily customer-centric. Companies refocusing their supply chains on customer service cited a number of reasons for doing so: reducing lead times, improving planning, improving fulfillment, and improving post-sale and return capabilities.
Product lifecycle management: While nearly 60 percent of high-tech supply chain executives ranked their companies as "market leaders" in product innovation, they had less confidence in their capabilities to manage the entire product lifecycle. Only 34 percent of respondents described themselves as market leaders in reverse logistics, and 40 percent said they were leaders in product retirement.
Emerging markets: Emerging markets remain a supply chain priority for high-tech executives. Nearly two-thirds of those responding to the survey said they had already established a presence in emerging markets or expect to do so within a year. North American companies are the most aggressive in this area, with 80 percent saying that their companies are in emerging markets or plan to be in a year.
To nearshore or not to nearshore
Although a recent UPS Change in the (Supply) Chain survey found a noticeable uptick in interest in nearshoring, three out of four responders are still doubters. Here are the top five reasons why some companies are thinking of relocating of their production facilities, and five reasons why other companies are staying put.
Five top reasons for nearshoring
1.
Improving service levels by bringing production closer to demand
77 percent
2.
Improving control over quality and intellectual property
55 percent
3.
Diversification of manufacturing due to natural and socio-economic risks
43 percent
4.
Cost benefit of China or low-cost manufacturing countries no longer compelling
37 percent
5.
Skills or technology limitations
35 percent
Five top reasons for not nearshoring
1.
The cost benefit of outsourcing to China or low-cost manufacturing countries remains compelling
50 percent
2.
Location of key suppliers
46 percent
3.
Fixed infrastructure is not moveable
40 percent
4.
China or low-cost manufacturing countries are our default manufacturing location
33 percent
5.
China or low-cost manufacturing countries' growing consumer market
32 percent
Source: UPS Change in the (Supply) Chain Survey, 4th Edition (2013)
The venture-backed fleet telematics technology provider Platform Science will acquire a suite of “global transportation telematics business units” from supply chain technology provider Trimble Inc., the firms said Sunday.
Trimble's other core transportation business units — Enterprise, Maps, Vusion and Transporeon — are not included in the proposed transaction and will remain part of Trimble's Transportation & Logistics segment, with a continued focus on priority growth areas following completion of the proposed transaction.
Terms of the deal were not disclosed but as part of this agreement, Colorado-based Trimble will become a shareholder in Platform Science's expanded business. Specifically, Trimble will have a 32.5% stake in the newly expanded global Platform Science business and will receive a Platform Science board seat. The company joins C.R. England, Cummins, Daimler Truck, PACCAR, Prologis, RyderVentures, and Schneider as a key strategic investor in Platform Science along with financial investors 8VC, Activant Capital, BDT & MSD Partners, Softbank, and NewRoad Capital Partners.
According to San Diego-based Platform Science, the proposed transaction aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which will give customers access to more applications and offerings.
From Trimble customers’ point of view, they will continue to enjoy the benefits of their Trimble solutions, with the added flexibility of the Virtual Vehicle platform from Platform Science. That means Virtual Vehicle-enabled fleets will receive access to the Virtual Vehicle Marketplace, offering hundreds of new and expanded applications, software, and solution providers focused on innovating and improving drivers' quality of life and fleet performance.
Meanwhile, Platform Science customers will enjoy the added choice of Trimble's remaining portfolio of transportation solutions which will be available on the Virtual Vehicle platform, the partners said.
"We believe combining our global transportation telematics portfolio with Platform Science's will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems," Rob Painter, president and CEO of Trimble, said in a release. "Increased collaboration between the new Platform Science business and Trimble's remaining transportation businesses will enhance our ability to provide positive outcomes for our global customers of commercial mapping, transportation management, freight procurement, and visibility solutions. This deal will result in significant synergies along with tremendous opportunities for employees to continue to grow in a more-competitive business."
The acquisition comes just five months after Platform Science raised $125 million in growth capital from some of the biggest names in freight trucking, saying the money would help accelerate innovation in the commercial transportation sector.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”