Regionalize your supply chain: The closer, the better



By ·

For five years, concepts such as reshoring, nearshoring or China+1 (see box) have propagated a stronger regionalization of industrial production. Instead of confining global production to Asia, production should take place in (or near) the market with regional supply chains. The goal for many managers and politicians is resilient local production at low cost with short delivery times and minimal CO2 emissions.

Many companies in Europe and North America from very different sectors are following this trend: for example, retail giant Walmart is currently setting up a $350 billion program over the next decade to produce toys, appliances or textiles in the United States independently of the Asian markets. manufacturers. In the semiconductor industry, major players such as Intel, TSMC, Texas Instruments and Samsung have announced investments of $115 billion in manufacturing plants in the United States rather than expanding capacity in Asia . Similarly in Europe, many projects around regional battery sectors have been announced, including Northvolt in Sweden, Poland and Germany or ACC in France.

On many levels, these ideas fundamentally contradict the thinking of past decades that supply chains were primarily planned around the lowest possible landed cost. This focus on cost has led to a heavy concentration of production in Asia in many industries. The resulting supply chains have enjoyed low wages, material and energy cost advantages, and low transportation costs, while the associated supply networks often span the globe. . As a result, complex structures have developed with long supply chains and response times, especially for the European and North American markets.

However, events such as the 2011 earthquake in Japan, the COVID-19 pandemic, and geopolitical tensions/conflicts have highlighted the limitations of these global supply chains. Even small disruptions such as a fire at a supplier somewhere in Asia, a border closure or the brief blockage of the Suez Canal in March 2021 can throw very complex networks out of sync and cause supply problems in other parts. of the world. Returning to orderly work networks often takes weeks or even months. Add to this the growing focus on CO2-efficient supply chains which also requires reorientation, supporting the trend away from the traditional global export model.

By ·

For five years, concepts such as reshoring, nearshoring or China+1 (see box) have propagated a stronger regionalization of industrial production. Instead of confining global production to Asia, production should take place in (or near) the market with regional supply chains. The goal for many managers and politicians is resilient local production at low cost with short delivery times and minimal CO2 emissions.

Many companies in Europe and North America from very different sectors are following this trend: for example, retail giant Walmart is currently setting up a $350 billion program over the next decade to produce toys, appliances or textiles in the United States independently of the Asian markets. manufacturers. In the semiconductor industry, major players such as Intel, TSMC, Texas Instruments and Samsung have announced investments of $115 billion in manufacturing plants in the United States rather than expanding capacity in Asia . Similarly in Europe, many projects around regional battery sectors have been announced, including Northvolt in Sweden, Poland and Germany or ACC in France.

On many levels, these ideas fundamentally contradict the thinking of past decades that supply chains were primarily planned around the lowest possible landed cost. This focus on cost has led to a heavy concentration of production in Asia in many industries. The resulting supply chains have enjoyed low wages, material and energy cost advantages, and low transportation costs, while the associated supply networks often span the globe. . As a result, complex structures have developed with long supply chains and response times, especially for the European and North American markets.

However, events such as the 2011 earthquake in Japan, the COVID-19 pandemic, and geopolitical tensions/conflicts have highlighted the limitations of these global supply chains. Even small disruptions such as a fire at a supplier somewhere in Asia, a border closure or the brief blockage of the Suez Canal in March 2021 can throw very complex networks out of sync and cause supply problems in other parts. of the world. Returning to orderly work networks often takes weeks or even months. Add to this the growing focus on CO2-efficient supply chains which also requires reorientation, supporting the trend away from the traditional global export model.







July 7, 2022


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COVID-19 & middot Global Trade & middot LTL & middot Nearshoring & middot Reshoring & middot
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