U.S. Companies Bring Supply Chains Closer to Home, According to KPMG Survey
U.S. Companies Bring Supply Chains Closer to Home, According to KPMG Survey
Jean-Pierre Trouillot, regional advisory leader at KPMG Americas, and Mary Rollman, supply chain leader in KPMG US's Consulting Practice, shared findings from the firm's new survey on changing supply chain strategies among U.S.-based supply chain managers. The survey, titled "The Proximity Premium: Strategically Reshaping Supply Chains in the Americas," revealed companies' efforts to move manufacturing closer to end markets—a practice known as Nearshoring—in order to enhance supply chain efficiency and resilience. This strategy involves shifting production from China and other regions of Asia to the United States, Mexico, Central and South America, and the Caribbean.
Trouillot noted that the report demonstrates U.S. businesses today are aware of the "fragilities associated with globalized and lengthy supply chains." The emergence of geopolitical tensions and other uncertainties is driving companies to "rethink and reshape their supply chain structures." Factors such as market access, talent, natural resources, and tax and regulatory incentives play important roles in this reassessment.
Rollman observed that the survey reveals many cost-related assumptions have changed and that proximity carries value. While the trend of U.S. supply chains shifting toward Nearshoring has been widely reported in recent years, it was notable that 80 percent of surveyed executives are re-evaluating their global supply chains. Additionally, more than 60 percent of participants indicated they intend to implement these changes within the next two years.
While labor costs remain a concern, executives are prioritizing making supply chains more resilient and reducing disruption risks caused by long distances between manufacturing facilities and end markets. The problems encountered during the COVID-19 pandemic—when critical materials and product supplies suddenly dried up—remain fresh in memory.
Trouillot stated, "Resilience and rapid market access are the primary drivers pushing supply chains closer to the Americas continent." "This issue ranks at the top of the agenda for U.S. executives."
Key Takeaways:
Global Supply Chain Reassessment: Eighty percent of surveyed executives are re-evaluating their supply chains.
Nearshoring Transition Plans: More than 60 percent of participants plan to act within the next two years.
Resilience and Fast Market Access: Companies are focused on making supply chains more resilient and enabling rapid market access.
COVID-19's Impact: The pandemic exposed the vulnerabilities of long and global supply chains.
Cost Assumptions Evolving: Businesses are reconsidering old assumptions about costs and recognizing the value that proximity brings.
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