Global sourcing vs nearshoring: what is a key difference?

• A. Global sourcing always reduces lead times; nearshoring increases costs.
• B. Global sourcing seeks lowest cost across regions; nearshoring locates production closer to home for speed and risk reduction.
• C. Global sourcing is only for services; nearshoring only for goods.
• D. Global sourcing eliminates all currency risk; nearshoring doesn't.

Answer: (B)

The main idea here is how the objective shapes the approach to sourcing. Global sourcing aims to minimize total cost by selecting suppliers from anywhere in the world, which can mean the lowest unit costs but often involves longer lead times and greater exposure to disruption. Nearshoring, by contrast, moves production or sourcing closer to the home market to improve speed and reduce risk from distance, time zones, and logistics, even if the unit cost isn’t always the lowest.

So, the best answer captures both ideas: global sourcing seeks the lowest cost across regions, while nearshoring locates production closer to home for faster delivery and lower supply-chain risk. This reflects the trade-off between cost optimization on a global scale and speed/reliability gained from proximity.

Statements that claim global sourcing always reduces lead times, or that nearshoring is only for goods, or that currency risk is eliminated, show misunderstandings of how these approaches work.