Next-shoring closer to demand and closer to innovation

Next-shoring is a new term developed to refer to the growing trend of manufacturing closer to the demand and the innovation. This concept is relatively new, it was first mentioned in the year 2013 by consulting firms such as McKinsey & company, and it involves a new approach to manufacturing as it is built to take advantage of local factors to reach efficiency by being close to the customer, and hence reacting faster to potential shifts in demand, and at the same time leveraging the effectiveness form being close to innovation centres (and particularly to an innovative base of suppliers).

In fact, Next-shoring is completely different from the offshoring and reshoring. The main differentiating trait is that this new approach aims to connect with both the buyers and suppliers by relying on geographical technology instead of geographical location.

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This new methodology introduces different patterns and needs in the logistics area. Many areas might be changed by this new practice such as the inventory management and the transportation. Despite the challenges it might entail, Next-shoring enhances efficiencies and boosts innovation

Here you can find a video where the McKinsey director Katy George, global co-leader of the manufacturing group explains the reshaping of the manufacturing which will help you better understand Next-shoring. The video is meant to clarify the concept and makes the argument that companies must view their manufacturing process as an ecosystem that needs to be optimized from the supply base to the consumer.


Written by: Ibtissam Azaoum

 

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