Can ‘inshoring’ be manufactured?

There has been much debate around the ’Made in’ label recently, even on this blog where Procurement Leaders researcher Jon Webb looked at where a keyboard should be labelled as made.

During his investigations he spoke to one manufacturer who said that he sourced his electronics from China, had the components assembled in Italy and the final product built in the UK. Where, Jon questioned should this product be labelled as having been ’made in’?

The issue for businesses coveting a ’Made in England’, ’Made in Italy’ or a ’Made in the US’ label is that, while it isn’t essential for manufacturing purposes it is important for some consumers and is therefore a key marketing tool that can resonate with consumers who wish to purchase goods they perceive to be made and sold on home turf.

Now the European Union has waded in and is debating whether to change its rules around how a company can use a ’Made in’ label. The plan is to make the label based on the value of components within the good in question with the most expensive part constituting where that good should be designated as being made in.

So, for example, if a handbag was made in England but the leather was purchased in Italy it would have to be labelled as ’Made in Italy’ rather than ’Made in England’.

Speaking to This is Money a representative of the European Commission said, “Of course I think it is a good idea. It is at the moment draft regulation and the main objective is to improve consumer protection.

“If something is a traditional product made in Britain then nothing will change – in fact it will be even more of a guarantee for consumers and promote even better clarity”.

For those businesses in Europe who cherish a certain ’Made in’ label, their procurement functions may find themselves roped into discussions with panicked marketing executives wondering how they can keep it.

If these regulations do pass, the answer may simply be that they are forced into sourcing key products from suppliers based in the market that they wish the label to describe. Those with long-established supply chains will be loath to do so and will be asking whether a few words on a label are worth that kind of disruption.

Click here to connect with Tim Burt on LinkedIn or visit the Procurement Leaders website.

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