Five types of shoring strategy

Shoring is a valuable and useful business strategy for growing and diversified entities. Equally it can be implemented by countries as well. Here is a bird’s eye-view of the five well-known types of shoring  business strategy:

1. In-shoring

Basically this strategy means that the entire production process in completed within a plant and/or premises. Sometimes storage and distribution may be located in a different place but within the perimeter of company property. Alternatively known as on-shoring, a terminology much preferred in policy papers, this one keeps overall control tightly so that management can monitor and supervise admin and growth.

2. Near-shoring

Succinctly put, this strategy differs from the previous one as regards to solitary location. One or more of the production functions could be located elsewhere other than in the main factory. Sometimes the entire marketing and/or distribution is re-located to give way for easy and smooth functioning of manufacturing. A word of caution: near-shoring does not mean the second location is outside the jurisdiction of a particular State or Country.

3. Off-shoring

Main thrust of this business strategy to move the main or significant part of the production abroad. America did this as regards to chip production in 1990s, when the manufacturing was devolved on Asia to Taiwan and South Korea. The entire plant & machinery was either moved out or new plants known as Fabs were built in these two countries. Presumably the sensitive and secretive part in chips manufacture is designing which the Americans kept for themselves in-shore.

Some literature uses “out-shoring” as an equivalent. Latter terminology started to give trouble as many construed it as an out-sourcing function used in data processing, supply of materials and provision of services by outside vendors. One more point: bankers use off-shore banking as a separate division. Here the idea is off-shore banking being outside the regulatory oversight of a country and not any physical separation of the banking arm from the main bank.

4. Ally-shoring

Alternatively known as “friend-shoring” this is a marvellous business strategy. Although executable in most types of business it has turned out to be popular in the military industrial complex where a perception has  grown that ally-shoring is the suitable one for production of weapons due to  comfort from the secrecy of its operations away from public eye.  Russia and Turkey are lead nations that follow this business strategy. Turkish drone manufacturer Baykar, is one of the key players who do ally-shoring with companies outside Turkey.

5. Re-shoring

Dubbed as escaping strategy, re-shoring fundamentally means getting back to in-shore after off-shoring attempts have either failed to materialize or succeeded to such an extent that the granting country’s security or business growth had been compromised. Good example is the American attempts to return to square one in chip manufacture. Arizona and Ohio are two states that are building new Fabs within their jurisdiction. TSMC in Taiwan and Samsung in South Korea are persuaded to invest in Fabs in America for this re-shoring exercise.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist