Sumitomo Drive Technologies is challenging how North American manufacturers evaluate sourcing decisions, making a data-driven case that unit price — the industry's dominant procurement metric — fails to capture the true cost of offshore sourcing. According to the Reshoring Initiative's 2025 Annual Survey, only 5% of original equipment manufacturers apply total cost of ownership (TCO) when making sourcing decisions, even as 40% report willingness to pay more to reduce lead times. When extended lead times, excess inventory, and production downtime are factored in, domestic sourcing becomes far more competitive than most procurement teams realize. The Reshoring Initiative estimates that a broad shift to TCO-based decision-making could reshore as much as $200 billion in U.S. manufacturing — driven not by policy changes, but by more accurate cost analysis.
CHESAPEAKE, Va., May 19, 2026 /PRNewswire-PRWeb/ -- Offshore sourcing often looks like a cost advantage—right up until it isn't. A delayed shipment can stall production for weeks. Inventory buffers meant to protect against long lead times tie up working capital. And when disruption hits, manufacturers are left managing risk far beyond what was captured in the original quote.
These are not edge cases. They are operating realities for procurement and supply chain teams across North American manufacturing. The issue is not that companies misunderstand cost, it is that the most common sourcing metric, unit price, does not capture it.
The disconnect shows up when sourcing decisions move from spreadsheets to the shop floor. Offshore pricing may appear competitive at the quote stage, but the true cost structure emerges over time—through extended lead times, production downtime, and the carrying cost of excess inventory.
Total cost of ownership (TCO) is intended to account for these factors, but in practice, many sourcing decisions still rely on simplified price comparisons that exclude them. The result is a gap between expected cost and actual performance.
"The conversation in our industry has been focused on unit cost. But unit cost is only one part of the equation. When you account for what a six-week offshore lead time actually costs a manufacturer in downtime and excess inventory, domestic sourcing becomes far more competitive than most procurement teams realize."
-- Tony Barlett, VP and COO, Sumitomo Machinery Corporation of America
Industry data reinforces how widespread this gap has become. According to the Reshoring Initiative's 2025 Annual Survey, only 5% of original equipment manufacturers apply total cost of ownership when making sourcing decisions. At the same time, 40% report a willingness to pay more to reduce lead times—an indication that buyers already recognize the value of speed and proximity, even if their sourcing models do not fully account for it.
The scale of the opportunity is significant. The Reshoring Initiative estimates that a broad shift to TCO-based sourcing decisions could reshore as much as $200 billion in U.S. manufacturing—driven not by policy changes, but by more accurate decision-making.
When a critical component arrives weeks behind schedule, the impact extends well beyond procurement. Production timelines shift, customer commitments are strained, and the cost advantage of offshore sourcing erodes quickly under real operating conditions.
Manufacturers that prioritize proximity, responsiveness, and supply chain visibility are better positioned to manage these risks. Domestic production—closer to engineering teams and end markets—offers greater control over outcomes, helping companies reduce exposure while maintaining performance.
Sumitomo Drive Technologies works alongside North American manufacturers to support this shift, providing domestic manufacturing capacity, engineering expertise, and responsive service designed to improve supply chain reliability.
Source: Reshoring Initiative 2025 Annual Survey / AMT-IMTS Manufacturing Sourcing Report. TCO Estimator data available at reshorenow.org.
Media Contact
Brion Humphrey, Sumitomo Drive Technologies, 1 7577124823, [email protected], www.sumitomodrive.com
SOURCE Sumitomo Drive Technologies
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