Is nearshoring the way of the future for furniture?

Over the past few years, one thing has been for certain — the furniture industry remains unpredictable and, at times, can even be classified as chaotic. As a result of economic pressures and supply chain issues such as longer production times, increasing tariff costs, inflation and possible halts of trades in certain countries, which is no longer unprecedented following Covid-19, furniture companies
are beginning to reevaluate their processes.

And for many, nearshoring is the answer. Nearshoring, defined as the relocation of manufacturing to a country that is closer to the products’ consumer, has grown in appeal. Companies that turn to nearshoring find they have more control over the entirety of the manufacturing process, while also cutting costs. A recent study by Supply Chain Quarterly found that 70% of U.S. businesses are looking to bring their production facility closer to American shores.

In addition to the supply chain disruptions that come with overseas manufacturing, products produced within the furniture industry are often larger, heavier, harder to transport and more complex to create in comparison. Companies that have begun to turn to nearshoring are enabling themselves to operate in a more agile way, while having better control over production.

New consumer demands demand new technology

With the emergence of new paths to supply chain, Mexico is an example of a country that’s primed for more demand in nearshoring, which would enable faster times to market given the proximity to the end customer. Mexico-based manufacturers will find themselves in a time of transformation as they increase production, while adopting technology that will allow them to keep up with consumer
demand. A Tijuana-based contract and residential furniture manufacturing company has already found gains in the Mexico area since upgrading their technology.

While nearshoring offers increased control during a manufacturing process, it also opens the door for companies to turn to new technology. New technology powered solutions will enable customization along with an increase in speed and quality. Customization is one of the key trends that has been seen in the furniture industry as more consumers are personalizing their purchases whether it be for color, size or pattern. Many manufacturers in Mexico are in the midst of a shift from mass production to a made-to-order model in order to keep up with this type of consumer demand and eliminate overproduction.

By manufacturing after order reception, furniture companies are able to avoid overstocking their inventories and reduce waste, all the while increasing their sustainability efforts. Companies will also be able to actively combat labor shortages currently facing the industry by limiting the dependence on expertise thanks to digitalizing manual tasks.

Nearshoring can also help with quality control, a rising issue in many countries during production. By implementing new technology into their manufacturing process, companies have the ability to standardize quality control and eliminate past issues that have stemmed from sewing and alternative production methods. This will help lessen the amount of waste created during production, while also sustaining or even increasing customer experience by consistently delivering high quality products.

2024 and beyond

While many companies have already begun their transformation and have turned to locations such as Mexico to reap the benefits of nearshoring and technology, combined, 2024 will be the year it becomes a necessity. As we venture into 2024, consumers are expected to hit the market with renewed trust and confidence, along with financial capacity, to invest in furniture and other home furnishings. Furniture manufacturers will need to be ready to keep up with demand to avoid backlogs. The combination of nearshoring and AI-powered solutions will shape the future of the furniture industry.

Leonard Marano is president of the Americas for Lectra.

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