Many high tech companies in Europe have begun moving their manufacturing sites closer to demand, according to a new survey by express carrier UPS.
European respondents to the fifth annual global UPS Change in the (Supply) Chain (CITC) survey - conducted for UPS by IDC Manufacturing Insights - said that ‘right-shoring’ was now part of their strategy. Right-shoring balances a number of factors to decide how close sourced materials need to be to production, warehousing and distribution, taking into account cost, quality and the time it takes to recover from any operational failures.
There is also an increase in near-shoring, which moves manufacturing or assembly closer to the location of demand, as companies improve service levels, reduce inventory in transit and seek greater control over product quality and intellectual property. Over a third of high-tech logistics decision makers in Europe are planning on near-shoring - up 9% from 2013.
Over half of respondents in Europe moved manufacturing closer to demand two or more years ago and 34% moved assembly closer to demand this year.
However, UPS says that off-shoring, which moves manufacturing or assembly to countries with low labour costs, still remains the most common strategy, with 59% of European respondents say they currently off-shore.
Over 500 senior high-tech supply chain professionals in Europe, North America, Asia Pacific and Latin America answered the survey, which aims to give a picture of how global supply chains are evolving in the industry.
Vice president marketing at UPS Europe, Scott Aubuchon, said: “High-tech companies can now better respond to demanding market dynamics because they are building more flexibility into their shoring strategies and supply chains. Companies in Europe take a holistic approach when they evaluate their transportation costs and the time it takes to deliver their goods.”
The survey also showed that the global growth outlook for high-tech exports is strong with 39% of European respondents saying they expect high tech industry export growth globally to increase at the current pace over the next two years, while 19% of them expect faster growth.
High-tech companies have successfully penetrated many emerging markets despite export barriers; two thirds of European respondents say they are already selling products in China, 41% in India and 31% in Brazil. The top three markets that high-tech companies in Europe are planning to enter this year are Brazil, India and APAC countries (excluding India and China).
