The Domestic Kitting & Co-Packing Workforce Gap

Supply chain conversations over the past year have centered on tariffs, trade policy, and sourcing strategy, as companies across manufacturing, retail, automotive, and consumer goods sectors are reevaluate where products are made. Nearshoring and reshoring initiatives continue to gain momentum as organizations look to reduce financial burdens and gain greater control over their supply chains.

What receives far less attention is what happens after that decision is made.

When production moves closer to home, a significant amount of finishing work moves with it. Kitting, co-packing, display assembly, customization, labeling, and light assembly work that was once completed overseas becomes a domestic operation the moment production moves closer to home. While executives often focus on transportation savings, inventory strategy, or tariff exposure, the success of many reshoring initiatives ultimately comes down to a different question:

Who is going to do the work?

The real challenge of reshoring is determining how to execute and scale specialized finishing work in an already constrained labor market.

The traditional reshoring discussion focuses on factories, production lines, and sourcing footprints, but manufacturing is only one piece of the picture.

Finished goods frequently require additional handling before reaching a retailer or distributor. Products may need to be bundled into variety packs, assembled into promotional displays, customized for specific retailers, relabeled for different channels, or packaged for e-commerce fulfillment.

Historically, much of that finishing work occurred near overseas manufacturing sites. As production moves closer to North American markets, these value-added warehousing services are moving with it, creating a growing need for domestic operational capabilities that can support production-adjacent work without sacrificing speed, quality, or cost.

Consumer demand is shifting faster and becoming harder to predict. To keep pace, retailers are looking to distributors for rapid responses to promotions, seasonal programs, and channel-specific requirements. E-commerce growth continues to create unique packaging and fulfillment needs. Manufacturers are also under pressure to reduce inventory exposure while maintaining flexibility.

These trends all elevate the importance of postponement strategies, where products are configured, assembled, or customized closer to the point of demand. Organizations can create retailer-specific displays, assemble variety packs, execute promotional packaging programs, and support specialized fulfillment requirements without carrying excess finished-goods inventory.

Manufacturing kitting and domestic co-packing operations support this flexibility by allowing companies to delay final product configuration until demand signals become clearer. Done well, they deliver:

• Greater responsiveness to changing demand
• Reduced inventory risk
• Faster execution of promotional programs
• Improved retailer compliance
• Better support for e-commerce and omnichannel fulfillment
• Increased supply chain agility

As nearshoring and reshoring accelerate, these capabilities are becoming a critical extension of the manufacturing process rather than an isolated warehouse function.

Many manufacturers and distribution operations continue to struggle with workforce shortages, turnover, wage pressure, and competition for skilled labor. The addition of new reshored operations only increases demand for workers across warehouse, production, and fulfillment environments.

As more finishing work moves onshore, companies may find themselves competing for the same labor pools needed to support both production and distribution activities.

The challenge is that value-added services are labor-intensive. Companies can invest in facilities, automation, and sourcing strategies, but none of those investments matter if operations cannot be staffed effectively.

For many supply chain leaders, workforce capacity is becoming the factor that determines whether reshoring initiatives achieve their intended outcomes. Questions that were once secondary are now becoming critical to planning discussions:

• How quickly can a new value-added operation be launched?
• Can labor scale to support seasonal peaks and promotional programs?
• How will productivity be maintained as volume increases?
• Can quality standards be preserved across multiple customer programs?
• How can organizations balance labor and automation investments effectively?

The answers determine how quickly companies can realize the benefits of bringing work closer to home.

The operational demands of value-added services call for workforce management, process engineering, production visibility, and continuous improvement to work together. Companies need partners that can move beyond simply supplying labor; they need teams who can start operations quickly, integrate with existing production environments, support automation investments, and maintain accountability for throughput, quality, safety, and cost.

This has an outsize impact in the early stages of a reshoring initiative, where new manufacturing strategies create immediate demand for kitting, assembly, packaging, and customization capability long before an organization can build it internally.

The ability to rapidly deploy labor, establish repeatable processes, and scale operations becomes a competitive advantage.