This article explores the growing shift toward nearshoring as a strategic response to global disruptions and rising geopolitical tensions. It highlights how nearshoring enhances supply chain resilience, operational agility, and sustainability, while also addressing common implementation challenges. The article concludes with a structured, five-step methodology for evaluating and selecting the right shoring strategy — grounded in data, scenario modelling, and alignment with strategic priorities.

The Rise of Nearshoring in a Volatile Global Landscape

For decades, globalization and free trade have been key drivers of economic growth and resource efficiency. However, recent global disruptions have exposed the vulnerabilities of this approach, prompting companies to reassess their sourcing strategies. Events such as the COVID-19 pandemic and the Suez Canal blockage – both of which caused major disruptions to global trade – highlighted the fragility of long, complex supply chains. More recently, escalating geopolitical tensions, tariffs, and trade wars have intensified these challenges, leading many organizations to increasingly seek ways to build more resilient and responsive supply chains. One emerging solution is nearshoring – a strategic shift that brings production and sourcing closer to end markets. For example, multiple Swedish companies have pointed to regionalization – rather than globalization – as a strategy to mitigate risks. In this context, nearshoring is gaining traction as a compelling alternative for navigating the increasing complexity of today’s geopolitical and economic landscape.

Resilience and Cost: Core Drivers of the Nearshoring Shift

The need to strengthen resilience and ensure supply continuity has become a key driver behind many companies’ shift from traditional offshoring to nearshoring. By diversifying production across nearshore locations, companies can shorten lead times and minimize the risk of disruptions inherent in complex supply chains. Nearshoring also increases agility and speed to market—enabling faster responses to shifting customer demands, market trends, and regulatory changes. For example, H&M states in its 2024 Annual Report that it is investing in supply chain flexibility and expanding nearshoring capacity to accelerate responsiveness to customer-driven trends. In addition, shorter transportation routes help lower carbon emissions, while geographic proximity allows for greater oversight of sustainable practices and labor conditions. These advantages align closely with today’s growing consumer expectations for ethical and environmentally responsible operations. For companies, embedding sustainability into operations also reduces exposure to environmental risks – such as carbon taxes, energy price volatility, and climate-related disruptions – further reinforcing long-term resilience.

Beyond resilience, cost management also plays a pivotal role in the shift towards nearshoring. Traditionally, lower production costs have been a primary driver for outsourcing to low-wage countries overseas. However, wages in traditional offshore hubs like China have more than doubled over the past decade, reducing the incentives for maintaining production in these regions. At the same time, advancements in technology – such as advanced robotics, AI, and IoT – have enabled higher efficiency with fewer workers, making automated “smart factories” in nearshore regions a cost-competitive alternative to low-wage countries in Asia. A notable example is the German sportswear brand Adidas, which relocated part of its production from Thailand to Germany to be closer to its customers. Although labor costs in Germany were significantly higher, the shift was justified through gains in efficiency enabled by production automation. Furthermore, offshoring often entails hidden costs, including long shipping times, quality control issues, and currency fluctuations. By nearshoring production, companies can not only lower transportation costs but also achieve better oversight and communication, reducing costly defects and quality issues.

Strategic Hurdles and Considerations

Despite the many advantages of relocating production closer to home, adopting a nearshoring strategy is not universally applicable and must be tailored to each company’s context. According to the Bain Operations Executive Survey 2024, 80% of COOs plan to increase onshoring or nearshoring in the next three years, while only 2% of companies have fully implemented their onshoring or nearshoring strategies. Common barriers involve significant upfront and ongoing costs, infrastructure complexities, and limited supplier availability or talent pools in nearshore regions. This requires thorough strategic assessment in which companies must evaluate existing infrastructure, explore potential new sites, and review their broader ecosystem of suppliers, partners, and service providers. Regulatory differences between countries—such as labor laws, tax policies, and trade agreements—add further complexity, requiring detailed evaluation to prevent unexpected costs. While these challenges highlight the complexity of nearshoring decisions, they also underscore the importance of a structured, data-driven approach. Without a clear structure, organizations risk making reactive and fragmented decisions that fail to deliver long-term value.

Evaluating and Selecting the Right Shoring Strategy

To address this need and guide shoring strategy decisions, Opticos applies a structured methodology grounded in deep expertise in sourcing and supply chain strategy. This approach enables organizations to systematically evaluate trade-offs, simulate future scenarios, and align operational decisions with strategic priorities. The methodology comprises five key steps:

1. Current State Assessment: The first step is to establish a clear operational baseline by mapping the existing supplier and distribution network, locations, and operational flows in collaboration with key stakeholders. This includes evaluating parameters such as cost structure, inventory flow, fulfilment operations, delivery performance, and enabling technologies. It is equally important to identify current constraints and risk exposures. This comprehensive assessment ensures a shared understanding of the present setup and highlights critical pain points as well as opportunities for improvement.

2. Supply Chain Footprint Evaluation Model: A tailored evaluation model is developed for the organization using relevant internal and external data. This model serves as the analytical foundation for testing and comparing strategic scenarios in subsequent steps. Typical evaluation dimensions include proximity to key consumer markets, transportation costs and lead times, labor costs and availability, returns logistics, and sustainability and regulatory compliance.

3. Scenario Development and Simulation: Multiple sourcing and distribution scenarios are developed and simulated based on selected variables. ‘What-if’ analyses are used to assess the impact of changing conditions or risks — such as rising tariffs or supply chain disruptions — on operations. These simulations can be further enriched with demand forecasts to evaluate how different markets and product categories may evolve over time.

4. Strategic Fit and Gap Analysis: Relevant scenarios are evaluated against defined criteria and strategic priorities to assess alignment with overarching business objectives. A structured gap analysis is also conducted to identify critical gaps between the current and optimal states. Ultimately, this step guides the selection of the shoring strategy that delivers the greatest operational and financial value – while also ensuring risk mitigation and enhanced resilience. In doing so, it empowers planners and decision-makers to make informed, resilient shoring choices.

5. Transformation Roadmap: Once the shoring strategy is selected, a high-level transformation roadmap can be developed. This plan outlines key decision milestones, phased implementation steps, risk mitigation measures, and investment and resource planning. The roadmap ensures alignment with the broader business strategy and provides a clear, actionable path from the current state to the desired future supply chain setup.

At Opticos, we help clients navigate complex environments and build future-ready organizations that are competitive, resilient, and sustainable. By combining deep industry insight with strategic execution, we empower leaders to make confident, informed decisions in times of uncertainty and change.
From mitigating geopolitical risks to seizing new growth opportunities, we are a trusted advisor – supporting our clients in transforming risk into readiness, and readiness into strategic advantage.

Interested in discussing supply chain strategy? Contact us