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Case Study: Myers Industries Integrates Planning Across Multiple Business Units
Introduction
In the face of an evolving global landscape, the importance of sound supply chain strategy has become ever more apparent. The recent report titled "The Proximity Premium: Strategically Reshaping Supply Chains in the Americas," prepared by KPMG, highlights crucial industry trends and challenges regarding vulnerabilities associated with lengthy globalized supply chains. Jean Pierre Trio, the regional advisory leader for KPMG Americas, alongside Mary Roman, principal and supply chain leader in KPMG's advisory practice, provided insights on the findings of this report.
Key Trends in Supply Chain Management
The report sheds light on significant trends driving supply chain decisions today. Key factors pushing businesses to rethink their supply chains include:
- Market access: Industries are re-evaluating where to source and distribute products.
- Talent availability: The skilled labor pool is crucial for operational success.
- Natural resources: Proximity to resources can minimize costs and risks.
- Tax and regulatory incentives: Benefits available at different regional levels can heavily influence decision-making.
The results of the survey noted that many companies are recognizing the need for stronger, agile, and flexible supply chains, resulting in shifts towards operations closer to the Americas.
High-Level Insights from the Survey
The findings of the survey indicated that a notable proportion of companies are reevaluating their global supply chain strategies. A striking figure emerged: 80% of executives reported that they are reconsidering their supply chain practices. This figure underscores a significant shift in the industry.
Interestingly, over 60% of executives expressed a desire to make changes to their supply chain strategies within a two-year timeframe. This urgency reflects newfound priorities in the wake of ongoing geopolitical uncertainties and market variabilities.
Proximity as a Priority
According to Trio, three out of five executives indicated that the global trade environment is urging them to focus on regional and domestic sourcing. Resilience and speed to market are critical objectives that are guiding supply chain decisions. Roman elaborated on how proximity can lead to reducing lead times and enhancing relationships with suppliers, thus fortifying supply chain efficiency.
The Costs of Proximity vs. Globalization
While cost has historically been the primary consideration influencing supply chain decisions, proximity is emerging as a long-term strategic objective. The costs associated with global sourcing, particularly transportation and geopolitical risks, have become increasingly significant. The survey indicated that many are recognizing the value of shorter supply chains, which can provide a competitive edge amid rising transportation costs and supply chain uncertainties.
Interestingly, labor rates in Mexico are becoming competitive with those in China, making regional sourcing not only viable but potentially more cost-effective when considering logistics and lead times.
Recommendations for Future Supply Chain Strategies
With companies reassessing their supply chain strategies, experts believe this trend likely represents a permanent change rather than a temporary reaction to recent disruptions. Enhanced visibility and transparency in supply chains, fostered by regional sourcing, are expected to play a pivotal role in future supply management.
The discussion reflects a broader understanding that while the core risks associated with supply chains remain, the emphasis on developing strong supplier relationships and adaptive sourcing strategies will be essential in navigating potential disruptions.
Introduction
- Supply Chain Management
- Proximity Premium
- Market Access
- Resilience
- Speed to Market
- Regional Sourcing
- Logistics Costs
- Geopolitical Risks
Introduction
Q: What is the main focus of the KPMG report titled "The Proximity Premium"?
A: The report analyzes the vulnerabilities associated with long global supply chains and highlights trends encouraging companies to restructure their supply chains closer to the Americas.
Q: Why are companies re-evaluating their supply chains?
A: Many companies are reconsidering their supply chains due to unexpected market and geopolitical events that have highlighted the risks of globalized sourcing.
Q: How does proximity affect supply chain management?
A: Proximity can lead to reduced lead times and enhanced relationships with suppliers, ultimately improving supply chain efficiency.
Q: Are costs still a primary consideration in supply chain decisions?
A: While costs remain important, companies are increasingly recognizing the long-term value of proximity and resilience in their supply chain strategies.
Q: What role does labor cost play in supply chain sourcing?
A: Labor rates in regions like Mexico are becoming competitive with those in China, making regional sourcing potentially more viable and cost-effective.