Friendshoring vs. Nearshoring

Friendshoring and nearshoring are two related but very distinct approaches to managing global supply chains.

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Friendshoring and nearshoring are two related but very distinct approaches to managing global supply chains.

Friendshoring, for instance, refers to the practice of sourcing from trusted, long-term suppliers regardless of their location. This approach is often used by companies that have strong relationships with their suppliers and are focused on building long-term partnerships. Benefits of friendshoring include improved quality, reliability and collaboration, however the challenges include a reduced ability to respond quickly to changes in customer demand and higher costs compared to sourcing from low-cost countries.

Nearshoring, on the other hand, refers to the practice of moving production or sourcing closer to the end market. This is often done to reduce the time and costs associated with long-distance shipping and respond quicker to changes in customer demand. Benefits of nearshoring include improved delivery times, reduced transportation costs, increased flexibility and improved product quality, while the challenges include higher labor costs, cultural differences and potential language barriers.

There is limited data on the exact benefits and challenges of nearshoring and friendshoring, as these practices are relatively new and evolving. However, a 2019 survey of supply chain executives by Accenture found that 75% of companies were interested in nearshoring, while 59% were interested in friendshoring. The survey also found that companies that had implemented nearshoring reported improved delivery times, reduced transportation costs and improved product quality, while those that implemented friendshoring reported improved quality, reliability and collaboration.

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