Rather than focus on offshoring or ‘re-shoring’ — the term used to describe the return of manufacturing to developed markets as wages rise in emerging ones — manufacturers need to concentrate ‘next-shoring’ strategies that focus on what is coming next, says a new report by global management firm, McKinsey & Co McKinsey & Co.
Next-shoring transcends geography and focuses on physical proximity to demand markets, talent and customers. Next-shoring is expected to move manufacturing areas close to where the raw materials or customers are, cutting down on distribution time and reducing costs. Being close to demand is particularly important at a time when consumption in emerging markets is growing rapidly, boosting with it the diversity of the regional preferences that manufacturers must contend with.
A ‘next-shoring’ perspective, which emphasizes proximity to demand and proximity to innovative supply ecosystems, will trump labor costs as technology transforms manufacturing operations in the years ahead.
The lack of an established manufacturing sector means that Africa currently relies on importing items like machine parts, consumables, household goods, tools and building materials. However, as next-shoring takes root, 3D printing becomes more versatile and digital manufacturing more widespread, African nations can manufacture such objects domestically and reduce dependency on costly imports. This will create an environmentally friendly ecosystem that does not require factories, machinery, labor or capital. The savings, both direct and indirect, will afford many people the opportunity to lift themselves out of poverty.
However, one area of concern is how prepared African students are to become innovators in tomorrow's economy. There are two primary entry points into the world of 3D printing and other digital manufacturing technologies. The first is the education sector. Priority should be given to getting the digital culture into schools so that youth can become conversant with the technology and increase their interest in science, technology, engineering and math (STEM).
The second point of entry involves adding latest digital knowledge and technology to Africa's innovation corridors. Exposing entrepreneurs to the latest in advanced manufacturing technologies can teach them to drive innovation through rapid prototyping.
The opportunities to unlock innovation and create employment through entrepreneurship are endless, and hearteningly the youth of Africa stand to benefit from all of them.