Nearshoring, Reshoring, and ERP: Reconfiguring Global BOMs 

Introduction:
The map of manufacturing and sourcing is being redrawn. Rising freight costs, growing trade uncertainty, and a renewed focus on supply resilience have pushed many firms to rethink where they make things — and how they keep the books and the inventory that support that work.  

For organizations that manage multi-site bills of material (BOMs), transfer pricing and inventory repositioning, the quiet hero in this rearrangement is the ERP system: the single platform that can make complex supplier network changes visible, measurable and executable. 

Why firms are moving parts closer to home – now 

Two trends are clear. First, global trade volumes and policy uncertainty are wobbling in ways that affect lead times and cost assumptions companies long treated as stable. The World Trade Organization reports that world trade rebounded to larger levels after recent declines but warns that tariff shifts and policy moves are increasingly reshaping sourcing calculus. This has companies asking whether the true cost of offshoring — when you account for volatile freight, tariffs and inventory carrying — still makes sense.  

Secondly, the shipping economics has changed drastically in the last few years: container and sea shipping rates increased sharply as a result of pandemic-induced disruptions and changed landed-cost models that had previously made low-cost countries the default. Analyses indicate that shipping and logistics increases have significantly raised the variable cost of long-distance supply chains, and driven procurement teams to evaluate suppliers that can be accessed geographically closer to the customer. 

Result: an uptick in nearshoring and reshoring interest across sectors. Surveys and market trackers report a meaningful share of buyers experimenting with closer suppliers; in some regions nearshoring already represents a noticeable slice of purchases. These moves are rarely total reversals — instead firms are reconfiguring supplier networks, shifting some BOM nodes nearer to demand center while keeping other nodes where they best fit.  

The practical problems companies face when they reconfigure BOMs 

Changing a supplier is more than signing a new contract. For manufacturers and complex assemblies, the ripple effects include: 

 

• • Multi-site BOM alignment: Components may be sourced from different geographies or manufactured in staggered stages; BOMs must reflect alternate routings, substitution rules, and regional variants. 
     

 

• • Transfer pricing and intercompany accounting: Moving production across borders or between divisions changes how costs are allocated, how intercompany invoices are generated, and how margins are reported. 
     

 

• • Inventory repositioning: Shorter supply legs may reduce safety stock needs in some locations but raise them in others; lead-time assumptions change and so do reorder points. 
     

 

• • Regulatory and documentation flow: Customs documentation, certificates of origin and compliance checklists must flow through operational systems with every supplier change. 
     

Each item on this list creates data, process and control demands that overwhelm spreadsheets and ad-hoc point solutions. 

How modern ERP systems become the nervous system for supplier network redesign 

This is where ERP systems come into play: they are not just transactional ledgers. Contemporary ERPs that integrate procurement, manufacturing, inventory, and finance allow businesses to model and simulate supplier network changes before they go live. Key capabilities that make that possible include: 

 

• • Multi-site BOM management — ERPs support alternate BOMs and manufacturing routings per site, enabling planners to switch production among locations without losing traceability. 
     

 

• • Simulated landed-cost and scenario modeling — by combining freight rates, tariffs, duty rules and local labor inputs inside the system, companies can compare supplier options on total cost, not just unit price. 
     

 

• • Intercompany accounting and transfer pricing controls — the ERP can automatically generate the correct intercompany postings and invoices when a part moves from one jurisdiction to another, reducing manual reconciliations and tax risk. 
     

 

• • Inventory repositioning tools — advanced safety stock and multi-echelon planning modules let firms see where inventory should be rebalanced to meet service targets at minimum cost. 
     

 

• • Change governance and audit trails — when supplier choices affect quality, compliance or warranty exposure, ERPs provide versioned records so decisions are auditable. 
     

Academic and industry research highlights ERP’s central role in tying operations and finance together for these exact use cases: ERP integration reduces decision lag, improves data fidelity and lets cross-functional teams run “what if” scenarios faster.  

Use cases in practice – three short sketches 

 

1. 1. A multi-plant electronics maker models moving a PCB assembly from a distant low-cost plant to a nearby contract assembler. Using ERP scenario tools they quantify reduced freight, slightly higher local labor, and lower safety stock. The system auto-generates updated BOM revisions and flags required customs forms, shortening the go-live window from months to weeks. 
       

 

2. 2. A consumer goods company splits a product family across regions: some SKUs continue to be finished offshore while volume SKUs move regionally. Transfer pricing rules in the ERP handle intercompany margins and VAT treatment automatically, ensuring finance teams don’t scramble at month end. 
       

 

3. 3. An automotive supplier uses multi-echelon planning in its ERP to reduce central buffer stocks by decentralizing slow-moving components to regional hubs — a move that cuts emergency freight expenditure and improves responsiveness to sudden local demand spikes. 
       

These examples show that ERP is not merely a record-keeper during supplier network changes — it’s a planning and control platform that reduces the cost and risk of transition. 

Measurable benefits and things to watch 

When firms use ERP well during nearshoring or reshoring initiatives, metrics that improve typically include lower expedited freight spend, reduced excess inventory, faster supplier onboarding, and cleaner intercompany accounting. Surveys show many manufacturers have either reshored or are actively evaluating it; that intention translates into procurement projects where ERP-enabled modeling plays a decisive role.  

But it’s not automatic. Success depends on clean master data, realistic freight and duty inputs, clear governance over BOM variants, and cross-functional alignment between procurement, plant operations and finance. Without those, the ERP becomes an expensive archive of mismatched assumptions. 

A short how-to for CIOs and supply leaders 

 

1. 1. Start with master-data cleanup. Poor item and supplier data make any simulation meaningless. 
       

 

2. 2. Model total landed cost, not unit price. Include freight, duties, inventory carrying and service-level penalties. 
       

 

3. 3. Enable alternate BOMs and routing rules. Capture substitution rules and regional variants inside the ERP. 
       

 

4. 4. Automate transfer pricing where possible. Reduce month-end reconciliation load and tax exposure. 
       

 

5. 5. Run pilots and measure lead-time variability. Use a small product family to validate assumptions and controls. 
       

Closing thought 

The wave toward closer sourcing isn’t a binary reversal of globalization — it’s a reweighting of risk and cost parameters. Skilled use of ERP for supplier network redesign turns uncertainty into quantifiable options.  

Companies that combine good data, realistic cost models and ERP workflows can move components nearer to demand centers while keeping margins and controls intact.