Re-evaluating Nearshoring: The Total Cost Conversation with Finance
Following the supply chain stresses exposed yet again in this Iran war on top of last year's challenges, many commercial teams are eager to explore nearshoring options to improve agility.
The barrier, as always, is the initial cost comparison. A CFO looking purely at the Free On Board (FOB) price will almost always find nearshoring more expensive than Far East sourcing.
To move this strategy forward, commercial leaders need to change the language of the conversation. We must shift from discussing "lowest unit cost" to "lowest lifecycle cost."
A skilled sourcing team needs to be able to quantify the financial value of agility. What is the margin value of being able to chase a best-seller in season? What is the cost avoidance of not having to markdown late-arriving stock? What is the working capital benefit of holding lower safety stock due to shorter lead times? With shorter lead times, orders can be issued later, pre-allocations and store labelled packs for initial injections can be made later when there is more certainty in the sales projections.
Nearshoring is not just a risk mitigation strategy; it is a net margin protection strategy. But it requires the commercial skills to prove that case on a spreadsheet to the CFO.
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Posted by Brian Hume
13th May 2026
