Legal Considerations for Shortening the Supply Chain

The pandemic started the conversation around reshoring—and while many supply chains have stabilized, recent tariff hikes on imported goods are putting reshoring back in the spotlight.

Connecticut manufacturers are rethinking fragile international networks in favor of more localized solutions.

Shorter suppliers can reduce risk, shorten lead times, and improve resilience. But transitioning supply chains brings legal and strategic challenges that must not be overlooked.

1. Revisit Contracts and Supplier Agreements

If you’re replacing a foreign vendor with a U.S.-based supplier, start by reviewing your current contracts.

Look out for exclusivity clauses, termination penalties, or minimum purchase commitments that could complicate the switch.

New contracts should clearly define deliverables, pricing, lead times, and dispute resolution terms.

2. Understand Regulatory Compliance

Domestic doesn’t mean simpler. U.S.-based manufacturers still face complex compliance obligations—to name a few: labor, immigration, environmental land use, international trade cybersecurity, supplier certifications and product safety.

If federal or state incentives are on the table, confirm that all eligibility conditions are met and you understand the “strings attached.”

Carefully vet any new partners to avoid downstream liabilities.

3. Protect Your Intellectual Property

Reshoring may require sharing sensitive designs, formulas, or processes.

Make sure your IP is shielded through well-drafted NDAs, licensing agreements, and contractual protections.

The good news: working with U.S. suppliers offers stronger legal recourse under domestic laws if something goes wrong.

4. Leverage Local Tools and Resources

One underused asset: CONNEX Connecticut, a manufacturers-only database managed by the business growth consultancy group CONNSTEP.

“CONNEX Connecticut provides a powerful tool for OEMs seeking to build more resilient and geographically focused supply networks by connecting them with qualified in-state suppliers,” says CONNSTEP president and CEO Beatriz Gutierrez.

Manufacturers, in particularly those planning or starting to reshore, can leverage CONNEX Connecticut and other supply chain resource tools to help identify options closer to home.

5. Anticipate Labor and Logistics Hurdles

While domestic supply chains may simplify some logistics, they come with real challenges: higher real estate, warehousing and labor costs, capacity bottlenecks, and a nagging skilled workforce shortage.

Work with state resources to source workers from new student pipeline programs and historically under-served groups such as veterans, women, second-chance workers, neurodiverse individuals and people of color.

Engage HR and legal early to navigate employment agreements, union issues, and wage-and-hour compliance. 

Looking Ahead

Restructuring your supply chain can enhance agility and control—but it’s not a one-size-fits-all fix.

Connecticut manufacturers should engage legal, procurement, operations, and HR teams early to weigh the benefits and risks.

With the right planning, reshoring can be a strategic step toward a more stable and responsive supply chain in our unpredictable world.

 

This article first appeared on CBIA's website and is published here with permission.