A mid-sized manufacturer decides to bring part of its purchasing back from Asia to Poland, Morocco or Portugal. The executive committee approves the principle in three weeks. Then the teams discover that the ERP cannot compare a unit cost in Shenzhen with a delivered-to-plant cost in Poznań, that the new suppliers have no item codes attached to them, and that the lead times configured in MRP date from the days of six-week ocean freight.
Nearshoring is usually presented as a procurement or industrial strategy decision. It is in fact an information systems project. This article details the six ERP workstreams to open, how to build an honest business case, the limits of the ERP on its own, and a 90-day action plan.
Why sourcing geography is an IT topic again
For twenty years, the implicit rule was simple: buy where the unit price is lowest and let logistics follow. The ERP was configured accordingly: one main supplier per item family, a stable average lead time, and customs duties treated as a marginal line.
That assumption has become fragile. Trade tensions and tariffs multiplying since 2025 (covered in our article on adapting your ERP to US tariffs), disrupted shipping routes, volatile freight rates and regulatory pressure on supply chains have put supplier location back at the centre of trade-offs. Our guide on supply chain resilience and dual sourcing already showed why the single low-cost supplier is no longer a risk-free model.
Caution is needed on the scale of the phenomenon. Actual reshoring is often partial: a few sensitive item families are moved, a nearby second source is added, and Asia is kept for the rest. That is precisely what makes the topic demanding for the ERP: it must manage a hybrid supplier portfolio, with different costs, lead times and customs rules depending on origin.
One practical consequence: the decision to reshore can no longer rest on a purchasing spreadsheet alone. It requires the information system to provide reliable data (full costs, actual lead times, service levels) and to absorb the change once the decision is made.
The 6 ERP workstreams of nearshoring
1. Onboarding and qualifying new suppliers
The first bottleneck is administrative. Changing supplier is not just signing a contract: you must create a vendor record, payment terms, delivery terms, item-vendor cross-references, quality control plans and, often, new customs classification codes.
What to prepare in the ERP:
- A vendor creation workflow with mandatory checks (legal identity, bank details, country, tax status) to avoid incomplete records and bank-detail change fraud.
- Staged qualification: candidate supplier, validated sample, qualified first batch, approved supplier. Each status determines what buyers are allowed to order.
- Multiple item-vendor references: a single internal item must be linkable to several sources, each with its own price, lead time, minimum order quantity and packaging.
For mid-sized companies using an SRM module, qualification can be run from that tool. Our ERP vs SRM comparison covers the trade-offs.
2. Landed cost and total cost simulation
This workstream justifies or invalidates the whole project. Landed cost is the real cost of an item delivered to the place where it is consumed: purchase price, main freight plus pre- and post-carriage, insurance, customs duties, forwarding fees, clearance fees, intermediate storage, and the financing cost of inventory in transit.
In many ERPs, the item cost is limited to the purchase price plus a few flat freight-in charges. That level of precision is not enough to choose between a distant source and a nearby one. You need to:
- break down inbound costs by component (freight, duty, insurance, forwarding) and by flow, not through a single global coefficient;
- keep a history of duty rates by customs code and origin, with effective dates;
- allow on-demand simulation: “what happens to the cost of this item family if supplier A is replaced by supplier B, with this Incoterm, this lead time and this duty rate?”;
- value the cost of inventory in transit and of the extra safety stock that distance requires.
Tier-1 ERP vendors offer native or add-on landed cost features. In mid-market ERPs, an external simulation tool fed by the ERP is common. What matters is that the calculation method is documented, shared between procurement and finance, and reproducible.
3. Multi-sourcing and order allocation
A successful nearshoring rarely ends with a single replacement supplier. It ends with two or more sources for each critical family: a responsive but more expensive nearby source, and a cheaper distant source for planned volumes.
The ERP must then know how to split demand. Mechanisms to configure:
- Allocation quotas: for example, a share of requirements assigned to each source, reviewable by period.
- Priority rules: the nearby source for urgent orders and small runs, the distant source for large lots.
- Blanket orders and delivery schedules managed by supplier, with tracking of volume commitments (Asian contracts often include minimums to honour during the transition).
- Requirement consolidation: MRP should reason on the total requirement of the item, then split it, rather than generating independent proposals per supplier.
Without these rules, buyers manage allocation in parallel Excel files, and the ERP stops being the source of truth on commitments.
4. Safety stock and variable lead times
Shortening lead times should in theory reduce the stock you need. During the transition, the opposite is true: you must keep safety stock on the old source until the new one is qualified, and build a buffer on the new one until its reliability is proven.
Parameters to review in the ERP:
- Lead times by source, not by item: source A and source B have different lead times, and different variability.
- Actual statistical lead times: compute the gap between order date and actual receipt date, rather than keeping a theoretical lead time entered once and for all.
- Dynamic safety stock, recalculated from observed demand and lead time variability. Our article on supply chain resilience details the method.
- In-transit inventory management: several weeks of ocean transport tie up capital that a nearby source frees. Working capital is an argument for the business case, provided the ERP measures it.
5. Customs, origin and Incoterms
Changing geography changes the customs regime. Importing from a third country involves declarations, duties and classification. Sourcing within the European Union removes customs duties but keeps VAT reporting obligations (such as intra-EU trade statistics). A supplier in a non-EU Mediterranean country may fall under a preferential agreement, with proofs of origin to collect.
In the ERP, this translates into:
- Customs codes (tariff nomenclature) and origin held on the item-vendor record, because two sources of the same item can have different origins.
- Management of preferential origin proofs (supplier declarations, certificates) with validity dates.
- Incoterms: they determine who pays for transport, who bears the risk and when ownership transfers. The ERP must record them on every order and draw the right accounting consequences: inventory recognition date, treatment of goods in transit, cost allocation. Moving from FOB (departure from an Asian port) to DAP (delivered at place) changes the price, the risk and the accounting at once.
- The interface with the freight forwarder or customs software. Our guides on customs and international trade compliance and on freight forwarders and customs brokers cover these integrations.
6. Supplier compliance: CSDDD, EUDR, CBAM
Reshoring does not exempt you from compliance obligations, and creates new ones: a new supplier must be assessed, documented and monitored. Three regulations weigh on supply chains:
- Due diligence (CSDDD): map and assess the social and environmental risks of each supplier. See our article on CSDDD and the ERP. The timeline was changed by the EU simplification package, covered in our analysis of the Omnibus.
- The deforestation regulation (EUDR) for the sectors concerned. See the operational traceability plan (in French).
- The Carbon Border Adjustment Mechanism (CBAM) for imports of certain products (steel, aluminium, cement, fertilisers, etc.). See CBAM and ERP (in French). Moving to a European source can, depending on the product, reduce exposure to this mechanism.
The common thread: these obligations require structured supplier data in the ERP (country of production, certificates, questionnaires, risk scores). Capturing these attributes at onboarding avoids having to reconstruct them later.
The business case: comparing unit cost and total cost
The classic mistake is to compare two purchase prices. The right exercise compares two total costs of ownership, over a defined period and scope, with explicit assumptions. The table below lists the variables to document. No values are given here: they depend on your product, your volume and your contract.
| Variable | Distant source | Nearby source | Where to find the data |
|---|---|---|---|
| Unit purchase price | To be filled in | To be filled in | Contract, ERP purchasing |
| Tooling, mould amortisation | To be filled in | To be filled in | Contract, accounting |
| Freight and insurance | To be filled in | To be filled in | Forwarder quote |
| Customs duties and taxes | To be filled in | To be filled in | Tariff schedule, item code |
| Forwarding and clearance fees | To be filled in | To be filled in | Forwarder invoicing |
| Lead time and variability | To be filled in | To be filled in | ERP receipt history |
| Required safety stock | To be filled in | To be filled in | ERP calculation |
| Financing cost of in-transit inventory | To be filled in | To be filled in | Finance (rates), ERP |
| Quality: non-conformance rate, returns | To be filled in | To be filled in | Quality module |
| Stock-out and customer service cost | To be filled in | To be filled in | Sales, customer service |
| Compliance cost (audits, certificates) | To be filled in | To be filled in | Procurement, compliance |
| Currency risk | To be filled in | To be filled in | Treasury |
| Transition cost (qualification, double stock) | Not applicable | To be filled in | Project |
Three tips to make this table credible before an executive committee:
- Use real ERP data for lead times, quality and stock-outs, not theoretical averages.
- Build three scenarios (cautious, central, adverse) and show at what level of variation (freight, duties, currency) the conclusion flips.
- Separate the one-off transition cost from the recurring cost: a project can be defensible over three years without being so over twelve months.
Sometimes the calculation concludes that the distant source remains the best option. That is not a failure: it is the job of the business case. The useful outcome is often a partial dual sourcing rather than a full repatriation.
When the ERP is not enough: SRM, planning and control tower
The ERP is the transactional system: it records orders, receipts and costs. To steer a supply chain that is changing geography, it sometimes reaches its limits.
- SRM (Supplier Relationship Management): for qualification, continuous evaluation, contract management and collaboration with many suppliers, a dedicated tool delivers more than the standard purchasing module. It becomes useful once the number of suppliers or the documentation requirements exceed what the ERP handles comfortably.
- Supply chain planning (APS): optimised allocation across several sources, demand and supply scenario simulation, and constrained planning belong to advanced planning tools (SAP IBP, Kinaxis, o9 and others), or to the advanced planning modules of some ERPs.
- Control tower: tracking multimodal shipments, delays and alerts in real time requires a visibility layer fed by carriers. Our article on the supply chain control tower and ERP details this architecture.
The decision rule is pragmatic: add a tool only when you have identified a concrete ERP limit (for example, inability to simulate allocation, or no shipment tracking), and check master data quality before stacking layers. A planning tool fed with wrong lead times produces wrong plans, faster.
90-day action plan for a mid-sized company
This plan assumes a decision in principle exists on a limited scope (one to three item families). Its aim is to make the ERP ready to steer the change, not to repatriate everything in three months.
| Period | Steps | Owner | Deliverables |
|---|---|---|---|
| Days 1 to 15 | Scoping: choose pilot families, extract actual costs, lead times and service levels from the ERP for the last 12 to 24 months | Supply chain director, CIO | Validated scope, reference dataset |
| Days 15 to 30 | Build the landed cost model and business case table, with the three scenarios | Procurement, management control | Total cost model validated by finance |
| Days 30 to 50 | ERP configuration: multiple item-vendor records, customs codes, origins, Incoterms by source, allocation quotas | CIO, ERP consultant, procurement | Master data and allocation rules in testing |
| Days 45 to 65 | Review of safety stock and lead times by source, MRP simulation, transition stock plan | Planning, supply chain | Revised MRP parameters, stock plan |
| Days 55 to 75 | Compliance and customs: origin proofs, CSDDD/CBAM/EUDR attributes on the vendor record, forwarder interface | Compliance, customs, CIO | Documented procedures and ERP fields |
| Days 75 to 90 | Qualification of the first batch, pilot orders, tracking dashboard (lead time, quality, actual vs planned landed cost) | Procurement, quality, CIO | Pilot review, go/no-go decision for extension |
Points of vigilance: plan for double stock during the switchover; do not remove the old source from the master data before the new one is fully qualified; measure the gap between simulated and actual landed cost from the very first orders.
Illustrative mini-case (fictional example)
Illustrative example, fictional company. Figures are deliberately omitted; only the reasoning is representative.
A fictional mid-sized company manufactures electrical cabinets and buys metal enclosures from a single Asian supplier. After two successive late deliveries, management considers a second source in Central Europe.
The management controller builds the variable table with ERP data. They find that the nearby source’s unit price is higher, but once freight, duties, in-transit inventory, extra safety stock and the cost of the two delays (line stoppages, customer penalties) are included, the total cost gap narrows significantly on items with highly variable demand.
Decision: keep the Asian source for standard items with stable volumes, and assign the nearby source to customised items and urgent orders, under a quota reviewed every quarter. On the ERP side, the team adds item-vendor references, distinct Incoterms, lead times by source and an allocation rule in MRP. The result is not a repatriation, but a more balanced supplier portfolio, steered with more accurate data.
Going further
Nearshoring changes the physical flow, but it is the quality of ERP data that determines whether the decision holds over time. To structure your approach, read our guides on supply chain resilience, adapting to tariffs and control tower steering.
Preparing a reshoring and want to check that your ERP is ready? DigitsLane supports mid-sized companies with landed cost, multi-sourcing and customs data configuration. Contact us to scope a 90-day pilot on your critical item families.
