As companies increasingly shift production closer to end markets, the traditional procurement focus on finding the best individual suppliers is evolving into a more comprehensive strategy centred on developing regional supply ecosystems. This shift, known as cluster-led nearshoring, prioritises supplier density, cluster maturity, and multi-tier resilience, fundamentally transforming procurement teams’ roles from merely running requests for quotations (RFQs) to orchestrating complex networks involving anchor investments, co-location strategies, and partnerships with local governments.
Nearshoring today is less about merely relocating production and more about understanding and leveraging local capabilities and how well they interconnect. For example, regions in Central and Eastern Europe such as Hungary, Slovakia, Czechia, and Poland are emerging as electric vehicle (EV) electrification hubs due to their proximity to Germany and growing battery-cell manufacturing capacities. In these clusters, firms optimise not only based on individual supplier performance but also on how regional suppliers operate collectively, assessing factors like the availability of Tier 1 suppliers, nearby Tier 2 tooling or treatment partners, and supportive logistics and testing infrastructures.
This cluster-focused approach requires procurement teams to expand their remit, transforming into ecosystem orchestrators. They must engage actively with regional governments, evaluate cluster maturity, shape anchor commitments, and foster visibility across multi-tier supplier networks that can scale cohesively. Leading firms are developing internal supply density heat maps that score regions on cluster completeness, supplier layers, and logistics nodes, rather than just cost or proximity. This clustering strategy helps identify areas capable of scaled production with minimal fragmentation across borders.
Proactive ecosystem development is another key element, where multinational companies commit anchor volumes to key Tier 1 suppliers and support their capacity expansion or co-location in priority regions. Such commitments attract secondary suppliers, toolers, and local logistics providers, creating robust, self-reinforcing business clusters. Additionally, procurement teams standardise multi-tier visibility as part of supplier onboarding to ensure downstream partners like mold-makers or PCB etchers are reliable and regionally based, helping flag offshore dependencies that could disrupt operations.
Co-investment and capability-building partnerships further accelerate cluster development. Companies are sharing costs of local development with suppliers through joint facilities, training programmes, or innovation initiatives, fostering cluster maturation while aligning incentives on cost, risk, and technology advancement. Public-private collaboration is becoming increasingly important, with procurement working alongside economic agencies, cluster alliances, and trade councils to synchronise corporate sourcing with local industrial policies. These collaborations can unlock incentives, regulatory fast-tracking, and upstream supplier introductions, providing a competitive edge.
Mexico exemplifies these trends with significant growth in manufacturing and industrial clusters. Regions such as Baja California and Nuevo León have attracted considerable foreign direct investment, especially in automotive and electronics sectors, driven by rising costs in China and trade tensions. According to a KPMG survey, Mexico’s share of U.S.-serving supply chains is expected to reach 36%, overtaking Canada as the second-most popular nearshoring destination in the Americas. Local business leaders stress the importance of logistics clusters that unite private firms and government bodies to enhance competitiveness and streamline foreign trade infrastructure, as seen in Tamaulipas where regional collaboration is integral to supply chain improvements.
Nearshoring also ties into broader environmental, social, and governance (ESG) initiatives by reducing transportation emissions due to shorter supply routes, fostering job creation, and supporting sustainable economic growth in host regions. By simplifying compliance with local regulatory frameworks, particularly within trade blocs like the European Union, nearshoring facilitates responsible procurement practices that bolster sustainability.
However, these benefits must be weighed against challenges. Nearshoring often entails higher labour costs compared to offshore locations, requiring investments in upskilling the workforce and closer collaboration with educational institutions to fill talent gaps. The pivotal challenge for nearshoring strategies lies not just in localisation speed but in the resilience and adaptability of these supplier ecosystems amidst rapid demand fluctuations and supply chain disruptions.
Ultimately, nearshoring success belongs to procurement teams that treat supplier ecosystems as dynamic, living systems requiring ongoing stewardship, investment, and flexible planning. By architecting networks that combine cost advantages with structural agility, companies can build supply chains that are not only local and sustainable but also resilient to global shocks. The future of manufacturing and supply chains lies in this cluster-centric, multi-tier approach to sourcing and ecosystem development.
Source: Noah Wire Services
