How companies are changing their shipping to ease supply chain issues


The pandemic created a global supply chain backlog that has lasted for months, but some companies are beginning to find long-term solutions to get products to customers faster.

Over the past few decades, supply chains have become increasingly global, meaning there is more room for error, The Wall Street Journal reports. Now, with the pandemic only worsening problems, companies are considering new strategies.

Some of these include:

Regionalization: Setting up factories in multiple countries across the globe so those factories can supply to the closest markets, which minimizes a company’s risk. If a natural disaster impacts one factory, for example, sales would only be affected in that region.

Nearshoring: Moving factories closer to a distribution center, which shortens a company’s supply chain.

Reshoring: A company that previously moved overseas moves back to the country where it was originally located. This strategy can help with transportation bottlenecks.

These solutions don’t solve every problem, however, and come with risks, like major expenses. For example, the combined cost of U.S. and European companies moving out of China would be around $1 trillion.

But these strategies could help companies prepare for the future and possible shortage crises. Watch the video from The Wall Street Journal.