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Why nearshoring is the gateway to sustainable production

Anna Roos van Wijngaarden
May 10, 2024

With supply chain disruptions behind us and ambitious environmental targets ahead, nearshoring is a welcome solution. Manufy was built to ensure that this strategic move is accessible for all brands, big and small.

Nearshoring is the future of sourcing

The fashion industry is shedding its outdated sourcing practices characterized by long lead times, large order volumes, and limited flexibility. The new method, a proven solution for supply chain resilience, is called nearshoring. Some call it European Value Chains (EVCs). We call it producing closer to home.  

Nearshoring is happening as we speak – everywhere from China to the US to Europe, our home. 71 percent of big fashion companies report plans to jump the bandwagon before 2025. European equipment manufacturers are seeing a growing interest in nearshoring from apparel producers. Audit demand from EU-based buyers in the region went up with double digits – a sign of nearshoring appetite.

What exactly does it entail?

For European brands, nearshoring means embracing the “Made in Europe” seal. You used to source materials from far away (offshoring), such as in countries like Vietnam, India, or Bangladesh, and then made the strategic choice to relocate production to somewhere closer to your company or markets.

There are multiple popular nearshoring locations in Europe. Manufy manufacturers are spread all over the map, which comes with a wide range of expertise. Looking for sustainable denim? You’ll likely get reactions from Turkey. Home textiles hubs are plenty in Portugal, and for leather goods you might end up in Italy or Spain. By working with a matchmaking party like Manufy, you don’t have to overthink the where and who. Upon creating a request, the puzzle pieces start to fall into place.

Why is sourcing closeby a strategic move?

The social and environmental benefits of nearshoring pave the way for transitioning to circular production. It begins with a shorter or “reduced” supply chain linking your brand, markets, and suppliers.

Lower carbon footprint

Classic offshore supply chains are highly fragmented and not very transparent. Nearshoring reduces distances, transport times and environmental damage. After all, CNG vans emit significantly less CO2 than cargo ships and airplanes. A "Made in Cambodia" T-shirt travels over 60,000 kilometers before reaching Europe. That is one and a half times the earth’s circumference – too much.

Quality assurance

With nearshoring, transparency becomes a cornerstone, empowering you to actively participate in enhancing product quality and enforcing sustainability measures. This way you can reduce the risk of costly defects and returns while fostering improvement of products and processes. Together, you can swiftly pilot and implement new materials, dyeing and finishing methods, or circular ambitions. As you learn and grow together, trust in the relationship strengthens.

Advancing labor standards

Nearshoring lowers the bar for factory visits – appointment or by surprise – to monitor working condition standards (safety, hours, wages), reveal supply chain issues, and work on sustainable solutions with your suppliers. “Made in Europe" is not a shortcut to social sustainability, but proximity does make it easier to prioritize your impact goals through mutual learning, dialogue, goal-setting, and effective monitoring.

Responsive to markets

Nearshoring in Europe eliminates language and time zone barriers, resulting in faster delivery of the exact product you requested. Closeness enables your manufacturers to promptly respond to changing consumer demands, using real-time sales data and market feedback for quick product alterations, volume adjustments, and timely replenishment. This prevents costly stockouts and inventory costs while boosting customer satisfaction.

Added brand value

In scientific research dipped as the ‘made-in effect’, consumers increasingly appreciate brands that opt for local production. If explained well, they understand and value the sustainability improvements that come with nearshoring and feel better about their purchase. As consumers develop more and more sentiment for sustainability, this increases the brand value or “goodwill” of your business.

Risk mitigation & resilience

Being closer to your supplier is a “nice to have”, until the unexpected happens – a pandemic, natural disaster, financial crisis, or political conflict. Recent disruptions highlighted the advantages of shortened supply chains over vulnerable ones during crises: resilience and faster, ethical responses. They facilitate swift risk management amidst challenges such as unstable demand, logistical bottlenecks, material scarcity, and rising labor costs.

Nearshoring aligns with the overarching goal of achieving circularity in textile and garment production. | Credit: McKinsey & Company

What about the downsides?

Reversing a 50+ year tradition of offshoring in fashion takes time, but with adequate expectation management, nearshoring emerges as a low-risk, future-proof solution.

Fair prices

Moving away from the 'race to the bottom' means you’ll start paying a fair price to your suppliers. Costs for sampling and production may rise slightly, but your investment transitions to fair wages, clean energy, reduced pollution and water use, proper waste management, and all the benefits that come with physical proximity. “Attractive” labor and material costs in former “World Factories” are increasing anyway.

Winning and losing time

Nearshoring can decrease lead times compared to offshore production, but it has its own limitations. Changing your web of suppliers means you’ll be busy realigning material flows, timing, and communication. Smaller European factories may accept lower quantities, but they also require more time for samples and orders. Fortunately, research indicates that sustainability-oriented consumers are willing to wait for their deliveries.

Tighter compliance

Before its drawbacks became well-known, offshoring was popular due to lax regulations. Moving closer to home means having to adhere to stricter laws and standards. But it’s all worth it: research shows that focusing on regulatory compliance brings tangible benefits like improved reputation and operational efficiency. Moreover, the monetary costs of operating in countries like China are on the rise.

How can I start nearshoring today?

We're entering a new era in the fashion industry. As economies develop, cheap labor and material markets are gradually disappearing. Unsustainable fashion is out of style – and legislation will make it even more so.

In the nearby future, being close to your manufacturer equals being ahead. Kickstart your nearshoring journey on Manufy and realize your sustainable vision in Europe.

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