Article published in Supply and Demand Chain Executive
By: Tom Strohl
IBP is a critical capability for manufacturers to align their operations, forecast demand, manage resources effectively, and navigate the complexities of reshoring.
The Trump Administration’s reciprocal tariff policy — and similar trade measures that followed — have significantly altered the global trade landscape. As a result, manufacturers are re-evaluating their product supply strategies, with a growing number turning toward reshoring as a solution to rising costs and global uncertainty. Major companies have already announced plans to reinvest in U.S. manufacturing, underscoring a broader shift that’s gaining momentum.
The changing cost equation of global manufacturing
For decades, U.S. manufacturers relied on global supply chains to reduce costs. However, evolving trade policies and tariffs — particularly those targeting imports from manufacturing powerhouses like China — are making international production increasingly expensive.
This shift didn’t happen in a vacuum. The COVID-19 pandemic exposed vulnerabilities in global supply chains, prompting companies to rethink their dependencies. The CHIPS Act, introduced under the Biden administration, further accelerated this trend by offering incentives to onshore semiconductor and other advanced manufacturing operations. By 2021, more than 80% of U.S. manufacturers had plans to bring parts of their supply chain back to the United States.
Short-term impacts: Tariffs and operational challenges
In the near term, the effects of tariffs are being felt across the manufacturing landscape. Companies are seeing increased costs that are difficult to avoid or offset whether through supplier negotiations, diversifying sources, or other mitigation tactics. These cost pressures often leave businesses with a difficult choice: absorb the losses or pass them on to customers.
One increasingly common response is to bring production back to U.S. soil. While this approach introduces new challenges, such as higher labor costs and logistical hurdles, it also provides an opportunity to regain control over production and reduce exposure to trade policy volatility.
Beyond tariffs, global supply chain issues such as regulatory changes, shipping delays, and currency fluctuations further complicate international manufacturing. Together, these factors are compelling companies to reassess the long-term viability of offshoring.
The long-term benefits of reshoring
While the initial costs of reshoring may seem daunting, the long-term benefits may make the shift worthwhile. One significant advantage is the potential for greater supply chain security. By moving production back to the United States, companies can reduce their reliance on volatile international markets and protect themselves against future trade disruptions. Proximity to the U.S. consumer base also offers manufacturers the opportunity to improve responsiveness and reduce lead times, which can ultimately increase customer satisfaction and loyalty.
Reshoring also opens up opportunities for investment in automation and advanced manufacturing technologies, which are increasingly becoming a part of the U.S. manufacturing landscape. ABI Research predicts spending on smart manufacturing will exceed $950 billion in 2030 with the adoption of Industry 4.0 solutions like digital twins and automation. These innovations can offset higher labor costs and improve operational efficiency. Furthermore, reshoring can help foster economic growth by creating jobs and stimulating local economies, which is critical as the U.S. manufacturing industry could require 3.8 million jobs to be filled in the next decade.
How integrated business planning facilitates reshoring
Successfully reshoring manufacturing requires more than just a decision to move operations. It requires a comprehensive, strategic approach to align all areas of the business. This is where integrated business planning (IBP) becomes invaluable. IBP is a unified planning approach that links financial, operational, and strategic goals, ensuring all departments across the organization are aligned and moving toward shared objectives.
For manufacturers considering reshoring, IBP provides a single source of truth, making it easier to clearly assess the impact of change and take thoughtful action through both short-term adjustments and long-term strategic investments. It allows businesses to model different scenarios, such as shifts in production locations, changes in tariff rates, and fluctuating customer demands. With IBP, manufacturers can make more informed decisions about resource allocation, procurement, and inventory management, ensuring they can quickly adapt to new realities. This kind of flexibility is crucial when the global landscape is in flux.
Another key role of IBP is its ability to provide a holistic view of the entire supply chain. As manufacturers reshore, they need to understand how the movement of raw materials, labor availability, and the overall production process will be impacted. With IBP defining a shared version of truth, companies can ensure the three key business functions of product portfolio management, supply chain operations, and sales are aligned in their goals, minimizing silos and improving collaboration. This integrated approach helps companies mitigate risks and create contingency plans, enabling them to respond quickly if there are unforeseen issues, such as labor shortages or supply chain disruptions.
Moreover, IBP enhances communication and transparency across the organization, allowing senior leadership to track key performance indicators in real time. This can be especially important when managing the complexity of reshoring, as the transition may require continuous monitoring and rapid decision-making.
Preparing for the future of U.S. manufacturing
Reshoring offers a promising path forward for U.S. manufacturers facing the reality of rising tariffs and shifting trade policies, but there are always tradeoffs. The immediate impact of tariffs has made foreign production less attractive, prompting many companies to reconsider where their products are made. In the long term, reshoring can deliver numerous benefits, from greater supply chain security to increased investment in advanced manufacturing technologies. However, the success of reshoring efforts depends on the ability to plan and execute the transition in the context of the tradeoffs.
IBP is a critical capability for manufacturers to align their operations, forecast demand, manage resources effectively, and navigate the complexities of reshoring. As U.S. manufacturers continue to adapt to changing global conditions, IBP will be indispensable in helping them not only survive but thrive in an increasingly complex world of trade. By leveraging IBP, manufacturers can ensure that their decisions related to reshoring initiatives are made in the long-term best interests of the company, positioning themselves for continued growth and competitiveness in the future.