Your SME insider for supply chain, negotiations, and procurement
📌Agenda
✔ Negotiation Power Move – Targeted Nearshoring: The Surgical Approach Smart Manufacturers Are Using Now
✔ Breaking Insight – The Hidden Costs of Global Sourcing Most Manufacturers Miss
✔ Case Study – How HubSpot Cut Support Costs by 20% Through Strategic Nearshoring
✔ Trend Watch – Affordable Tools Helping SMEs Navigate the Regionalization Wave
✔ ProcWee™ Takeaways - Your Implementation Plan
📖 Mini-Story
When Michigan-based manufacturer Auto-Wares Group faced repeated delays from their Asian suppliers, Operations Director James Miller knew something had to change.
Longer lead times were causing us to lose customers. But the cost difference between Asian and North American suppliers seemed insurmountable for a company our size.
Instead of attempting a complete supply chain overhaul, Miller implemented a targeted approach, focusing first on their fastest-moving products that caused the most customer pain when delayed.
By shifting just 20% of our sourcing to regional suppliers, we significantly improved delivery reliability while keeping cost increases manageable. The premium our customers pay for reliability has actually strengthened our market position.
🎧📝 Executive Briefing: Your Podcast
Targeted Nearshoring: The Surgical Approach Smart Manufacturers Are Using Now
🚀 Negotiation Power Move: Targeted Nearshoring: The Surgical Approach Smart Manufacturers Are Using Now
Categorize commodities | Consolidate spend | Long-term contracts
Start With Critical/Fast-Moving Products
Prioritize regionalizing suppliers for your most critical or fastest-moving products first. According to Kearney's Reshoring Index, manufacturers who focus on high-turnover products see faster returns on nearshoring investments compared to blanket approaches (Kearney, 2023).Leverage Multi-Tier Supplier Mapping
Many regional suppliers already exist in your extended supply network. A Deloitte survey found that manufacturers often discover viable regional suppliers already serving as tier-2 or tier-3 providers in their existing supply chains (Deloitte, 2023).Form Regional Buying Consortiums
Partner with non-competing companies to increase buying power with regional suppliers. Industrial buying groups like IBC report that SMEs in purchasing consortiums secure better pricing and capacity commitments than those approaching regional suppliers individually (IBC, 2022).Implement "Stepping Stone" Contracts
Structure contracts with volume commitments that gradually increase over time. Studies show regional suppliers offer better pricing on longer-term contracts with gradual volume increases compared to immediate full-volume transitions.Use TCO Modeling in Negotiations
Develop comprehensive Total Cost of Ownership models that factor in all hidden global sourcing costs. Suppliers often reduce their premiums when presented with detailed analysis showing inventory carrying costs, logistics expenses, and compliance requirements.
🧠 Breaking Insight
Inventory cost | Qty.-Flexibility | New cost
The Hidden Costs of Global Sourcing Most Manufacturers Miss
✔️ The Inventory Burden – According to the Supply Chain Resource Cooperative at NC State University, midsize manufacturers typically carry 3-4 times more inventory for globally sourced components versus regionally sourced ones, tying up significant working capital (SCRC, 2022).
✔️ The Flexibility Penalty – Boston Consulting Group research reveals that companies with primarily global supply chains take significantly longer to respond to demand fluctuations compared to those with regional suppliers, resulting in higher obsolescence costs (BCG, 2023).
✔️ The Hidden Carbon Tax – As carbon border taxes and ESG reporting requirements expand in both North America and Europe, global supply chains face increasing compliance costs that most manufacturers haven't budgeted for (Kearney, 2023).
🏆 Case Study
20% cost reduction | Improved response times | Customer satisfaction 10% up
How HubSpot Cut Support Costs by 20% Through Strategic Nearshoring
Situation
HubSpot, a leading CRM software company, previously outsourced its customer support to a third-party provider in the Asia-Pacific region. While this approach initially reduced costs, the company faced challenges with time zone differences, communication delays, and consistency of service quality.
Actions
As documented by Ardan Labs (2024), HubSpot implemented a targeted nearshoring strategy:
✔️ Segmented Service Operations – Rather than relocating all support functions, HubSpot identified specific customer-facing operations that would benefit most from time zone alignment.
✔️ Phased Implementation – They created a gradual transition plan to minimize disruption, starting with North American customer support.
✔️ Regional Hub Development – Established nearshore teams in Mexico, Colombia, and Costa Rica, strategically located for time zone alignment with their North American customer base.
✔️ Cultural and Language Alignment – Prioritized hiring teams with strong cultural understanding of North American business practices and fluency in both English and Spanish.
Results
✔️ 20% Cost Reduction – Despite the higher labor costs compared to Asia, HubSpot achieved significant overall cost savings through operational efficiencies.
✔️ Improved Response Times – The time zone alignment enabled real-time support during North American business hours, eliminating communication delays.
✔️ 10% Increase in Customer Satisfaction – Resolution times decreased and customer feedback scores improved due to better cultural alignment.
✔️ Enhanced Productivity – HubSpot reported a 1.6x increase in productivity through their nearshoring initiative (Ardan Labs, 2024).
"The proximity advantage goes beyond just time zones," explained HubSpot's operations team. "Being able to hold regular in-person meetings and training sessions with our nearshore teams has fostered stronger communication and alignment with our company culture."
🗳️ Vote, vote, vote!
What's your biggest challenge when requesting resources for procurement initiatives during tough economic times?
📈 Trend Watch
Check tools | Consider supporting software | Inventory management
Affordable Tools Helping SMEs Navigate the Regionalization Wave
Forward-thinking midsize manufacturers are leveraging accessible technology to identify and develop regional supplier networks:
✔️ Digital Supplier Discovery Platforms – Services like Thomasnet and Alibaba's North American Supplier Network are helping SMEs identify qualified regional suppliers without expensive consultants or trade shows.
✔️ TCO Calculator Templates – Organizations like the Reshoring Initiative offer free Total Cost of Ownership calculators specifically designed for evaluating global-versus-regional sourcing decisions.
✔️ Regional Supplier Development Programs – Both the US and EU have established programs to support reshoring and nearshoring initiatives. The Manufacturing Extension Partnership in the US provides technical assistance for SMEs working to develop regional supplier capabilities.
"These tools are democratizing access to regional supply networks for companies of all sizes," explains the National Association of Manufacturers. "It's no longer just large corporations that can afford to build resilient regional supply chains."
ProcWee™ Takeaways & Action Steps
Apply these SME-proven tactics to build regional supplier networks without breaking the bank:
Prioritize strategically – Focus first on high-volume, time-sensitive products that cause the most customer pain when delayed
Build gradually – Implement a phased approach rather than attempting wholesale supply chain relocation
Look closer to home – Map your existing supply chain to identify regional tier-2 and tier-3 suppliers that could become direct partners
Combine forces – Partner with non-competing manufacturers to gain negotiating leverage with regional suppliers
Quantify all costs – Use TCO modeling to include inventory, flexibility, and compliance costs when comparing global versus regional options
💬 Ready to transform your negotiation outcomes?
As a specialist in strategic procurement, supply chain optimization, and negotiation psychology, I help organizations achieve significant cost improvements while strengthening critical supplier relationships – even in volatile market conditions.
My virtual negotiation mastery program combines psychological preparation with strategic frameworks, helping procurement teams worldwide achieve an average of 14% better cost outcomes (pssst, you don’t want to miss my spreadsheets and checklists).
Two ways I can support your organization:
Virtual Negotiation Workshop: Customized training for your procurement and leadership teams (ask me for onsite trainings, our program is very popular)
Strategic Consultation: Expert guidance on your most challenging supplier negotiations
Limited availability: I'm scheduling virtual sessions for May 2025. Reply to this email why we should work together.
Sources
Ardan Labs. (2024). A Case Study on Exploring Nearshoring Potential. Retrieved April 23, 2023, from https://www.ardanlabs.com/news/2024/a-case-study-on-exploring-nearshoring-potential/
Boston Consulting Group (BCG). (2023). Supply Chain Flexibility: The New Competitive Advantage. Retrieved April 23, 2023, from https://www.bcg.com/publications/2023/supply-chain-flexibility-competitive-advantage
Deloitte. (2023). Sourcing and Procurement. Retrieved April 23, 2023, from https://www2.deloitte.com/us/en/pages/operations/solutions/about-our-sourcing-and-procurement-services.html
Industrial Buyers Consortium (IBC). (2022). Industrial Buying Group. Retrieved April 23, 2023, from https://industrialbuyers.com/
Kearney. (2023). Made in America: Here to stay? Retrieved April 23, 2023, from https://www.kearney.com/service/operations-performance/us-reshoring-index
Supply Chain Resource Cooperative (SCRC). (2022). Global vs. Regional Sourcing: A Total Cost Analysis. NC State University. Retrieved April 23, 2023, from https://scm.ncsu.edu/scm-articles