Dun & Bradstreet Says Importers Need to Manage Nearshoring Carefully

Just as in any sourcing arrangement, U.S. companies need to understand how to navigate doing business through nearshoring.

When U.S. companies first began doing business with Asia, they needed to understand the cultures, business practices and even the languages of their new trading partners. So too it is with doing business with new sources in North and South America.

In its new report, “How Nearshoring Impacts Your Supplier Risk Management Program,” noted consulting company Dun & Bradstreet identifies a number of areas that importers should be focusing on to make sure they are managing the process.

At the very least, D&B recommends face-to-face meetings with the companies you are considering doing business with: “Visiting nearshore suppliers in person is a more realistic prospect, and there’s really no Zoom substitute for handshakes, facility tours and shared meals,” the report says.

D&B identified five areas to consider:

1. Geopolitical: Having a supplier in a nearby country doesn’t necessarily guarantee their working conditions will always be stable. Companies should monitor the political climate, national security, labor relations, economic uncertainty and monetary policies.

2. Environmental: As the world warms, natural disasters caused by freak weather events are becoming commonplace – and wreaking havoc on global supply chains. When assessing a potential nearshore supplier, it’s critical to understand how local climates might disrupt the manufacturing process and delivery of goods.

3. Regulatory compliance: Adhering to local and international laws and guidelines is a huge challenge. It’s important to seek assurances that a nearshore supplier is adhering to regulations on health and safety and toxic materials, among others.

4. Quality control: Manufacturing standards can differ vastly across regions, as can customer satisfaction thresholds. Checks should be carried out by organizations to ensure potential suppliers can meet the standards set by their own business, industry and market.

5. Competitive factors: Nearshoring has the potential to increase dependency on suppliers which are also used by competitors. This risk can be mitigated by sourcing alternative suppliers.

Nearshoring, like any new business strategy, should be approached carefully and with a full understanding of the companies and countries you are considering doing business with. Nevertheless, D&B says it can be a positive addition to U.S. company’s sourcing needs.