Many High-Tech Firms Adopt ‘Right-Shoring’ Supply-Chain Strategy, UPS Survey Finds
Many high-tech companies have adopted a “right-shoring” strategy for their manufacturing supply chains, an approach that balances factors such as cost, quality and transit time, according to UPS Inc.’s fifth-annual Change in the (Supply) Chain survey.
The survey, conducted for UPS by IDC Manufacturing Insights, polled 516 senior supply chain executives in the high-tech industry in North America, Europe, Asia, the Pacific and Latin America.
Offshoring of manufacturing and assembly operations to countries with low labor costs remains the most common strategy, but a growing number of tech firms said they are “near-shoring” — moving production closer to end markets — to improve service levels, reduce inventory in transit and gain more control over product quality.
Among the survey’s respondents, 45% said their companies use right-shoring strategies, 47% said they offshore and 35% said they near-shore. Near-shoring was up 25 percentage points from 2010.
“High-tech companies are building more flexibility into their shoring strategies and supply chains so they can respond better to demanding market dynamics,” said Dave Roegge, high-tech marketing director at UPS. “They’re thinking more holistically about their strategies to evaluate their transportation costs and the time it takes companies to deliver goods.”
The CITC survey also addressed industry expectations for technology exports.
Of the respondents, 46% said they expect global exports in the high-tech industry to grow at its current pace during the next two years, while 28% predicted faster growth, with North American and Latin American respondents being the most optimistic.
The survey also shows that high-tech companies increasingly are entering emerging markets and exploring 3-D printing to support new product development.
Among the survey respondents, 71% said they are selling products in China, 45% in India and 42% in Brazil. The top three markets that high-tech firms are planning to enter this year are Brazil, Russia and India, according to the survey.
Today, high-tech companies are using 3-D printing primarily as a way to spark innovation while designing new products, UPS said. A majority of survey respondents — 70% — reported hands-on experience with 3-D printing, including 32% who said they are just beginning to understand it.
UPS, based in Atlanta, ranks No. 1 on the Transport Topics TT100 list of the largest for-hire carriers in the United States and Canada.
