As a core strategic improvement directive, European companies are increasingly exploring nearshoring initiatives, relocating production capacities to cost-efficient regions, particularly within Europe and other low-cost countries. Thereby, the need to reduce operating costs, improve resilience, and enhance profitability are addressed.

Relocation projects, however, involve several challenges that require careful management. These include: 

• Personnel availability: High competition for skilled and unskilled labor in certain regions leads to workforce shortages and high turnover rates. 
• Cost vs. development trade-off: Developed regions provide only limited cost advantages, while less developed regions increase implementation risks and challenges. 
• Logistics bottlenecks: Poor transport infrastructure increases complexity and without proper management causes delays, impacting downstream processes. 
• Quality assurance: Maintaining product quality at low-cost sites requires strong quality management systems, training, and governance. 
• Cultural integration: Addressing cultural differences and ensuring workforce acceptance are critical for smooth integration across sites. 

To overcome the challenges associated with relocation and footprint optimization, modern nearshoring strategies often involve creating dual competencies at both main and low-cost locations. This approach enables companies to build agile production networks that are resilient to risks associated with nearshoring while boosting cost efficiency. Additionally, a focus on relocating large volume component and products is another lever to maximize the return on investment by ensuring that the financial benefits of relocation outweigh the associated costs and risks. 

For non-core technologies, full outsourcing is becoming a common practice. This allows companies to focus their resources on core competencies and strategic priorities, reduces operational complexity, and benefit from expertise and economies of scale of an external partner. 

The second key dimension for success is determining the right locations and target countries for relocation. This decision is highly complex and requires a tailored approach, as requirements and priorities vary between companies. A thorough evaluation process is essential to identify the most suitable locations that align with the company’s strategic goals and operational needs. Factors such as labor availability, wage levels, infrastructure quality, political stability, and the regulatory environment must be carefully assessed. Additionally, proximity to key markets and suppliers play a crucial role in minimizing transportation costs and lead times. Companies must also consider the cultural and language barriers that may impact workforce integration and collaboration. Furthermore, understanding the local legal and regulatory framework is essential to ensure compliance and avoid potential legal disputes. 

After country, companies need to assess financial and non-financial impacts of relocation. Beyond cost savings, they must evaluate effects on brand reputation, customer satisfaction, and employee morale. A comprehensive cost-benefit analysis should be conducted to evaluate the long-term implications of relocation and ensure that the decision aligns with the company’s overall strategic objectives. 

During the transition, maintaining product quality is a top priority. Companies must establish robust quality management systems and provide extensive training to local employees to ensure consistent product standards. This includes transferring knowledge and expertise from existing sites, as well as implementing strict quality control measures to monitor production processes. 

Ultimately, the success of site selection and relocation depends on a systematic and data-driven approach. Companies should leverage advanced analytics and decision-making tools to evaluate potential locations and create a reliable decision baseline. Engaging with local stakeholders, conducting site visits, and seeking expert advice from locals provide additional insights and strengthen the decision-making process. 

Nearshoring, dual-site competencies, and agile production networks help companies to address cost pressure and improve resilience in supply chain management. However, success in footprint redesign requires managing challenges such as workforce availability, quality assurance, and logistics to ensure successful implementation. With systematic approaches and strategic planning, companies can achieve sustainable cost improvements and maintain competitiveness in a challenging market environment.

Dolling, A.