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The Role of Technology in Sustainable Nearshoring

By Manuel Macedo - Honeywell América Latina
CEO and President


By Manuel Macedo | President - Wed, 06/07/2023 - 15:00

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In the last few years, nearshoring has become a prevalent business practice given the challenges the pandemic and geopolitical issues brought to the forefront. 

The disruption of value chains, their relocation, the shortage of items and components needed in the production of certain goods forced the manufacturing industry to look for new alternatives.

Today, more than a mere trend, nearshoring is a transformative force that is redefining the global economic landscape. At its essence, nearshoring can be a force that promotes sustainability and drives technology growth and development. 

Nearshoring is a practice that allows companies to adapt, evolve and reduce the costs associated with logistics and transportation by having a more efficient, shorter supply chain and more localized production. However, nearshoring is not only a smart business strategy, this practice could also promote intrinsic environmental benefits, such as reduced carbon footprint given the outsourcing to nearby, more closely located geographical locations.

Technology is at the heart of sustainable nearshoring. By embracing digitalization and automation through technological innovation, companies can reduce their environmental footprint, enhance communication, support local communities, and accelerate the transfer of knowledge, expertise and technology when making decisions on where to locate their operations.

Technology can also promote collaboration and knowledge-sharing between businesses and local communities, fostering a more inclusive and sustainable nearshoring ecosystem. By leveraging digital communication tools, companies can collaborate with local talent to drive innovation and accelerate growth in local communities.

Two key technology-aided drivers for sustainable nearshoring are digitalization and automation. Both open up additional opportunities for collaboration, allowing businesses to drive innovation. For example, in recent years, the Internet of Things (IoT) has enabled more sustainable nearshoring. By connecting sensors and other devices to the cloud, companies can gather vast amounts of data on their operations, allowing them to optimize processes, reduce travel and waste, and lower their carbon emissions when perfecting transportation logistics. 

Additionally, IoT sensors can be used to monitor the energy consumption of a manufacturing plant, identifying areas where energy efficiency can be improved. With these technology-aided implementations, companies can reduce their environmental impact and save on energy costs, making their operations much more sustainable. Additionally, through advanced data, analytics and machine learning, manufacturers can identify inefficiencies and make real-time adjustments to their processes, becoming more efficient. 

Another important technological advancement for sustainable nearshoring is automation, which is becoming an increasingly attractive option to reduce costs and increase efficiency. By automating certain tasks like production, assembly, or material handling, companies can improve quality and increase throughput. Automation can also help reduce the risks of workplace accidents, improving safety and overall working conditions for employees.

There’s also the case for exploring how artificial intelligence (AI) can help make nearshoring more sustainable by improving efficiency, reducing waste, and optimizing production processes. It can be particularly effective in supply chain management. By analyzing data and predicting demand patterns, AI could help companies optimize and manage their inventory levels more effectively, ultimately leading to a more sustainable supply chain.

Al can also be used to improve energy efficiency in manufacturing plants. By analyzing energy use patterns and identifying areas for improvement, it can help companies reduce their energy consumption and carbon footprint. Additionally, AI can help identify opportunities for renewable energy integration, such as the use of solar or wind power alternatives to power manufacturing operations.

In our interconnected world, technology continues to reshape our approach to sustainability, and among the more promising innovations is blockchain — a secure and transparent system that enables companies to track supply chains and ensure ethical and sustainable production practices. With blockchain, companies can verify the origins of their materials and comply with sustainability standards, fostering greater accountability and trust from consumers. 

From reducing carbon emissions to optimizing processes and ensuring there are no greenwashing practices, technology ─ be it automation, digitalization, IoT, AI or blockchain ─ will be critical in helping nearshoring be more sustainable.

We can also expect a brighter future for sustainable nearshoring by enhancing transparency, accountability, and trust in the supply chain. We can drive a shift toward greater sustainability and responsibility, all while fostering stronger connections between businesses, communities, and the environment.

Of course, companies still need to consider a range of factors when deciding where to locate their operations, including labor costs, supply chain logistics, and regulatory environment. By leveraging technology, companies can make more informed decisions, and how to optimize their processes to minimize environmental impact and maximize efficiency. With technology aiding nearshoring decisions, companies have the opportunity to improve their efficiency and productivity while continuing to help build a more resilient and sustainable future for all.

Photo by:   Manuel Macedo

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