It should come as no surprise to anyone involved in Supply Chain operations that the move towards what could be a major “Re-Shoring” effort may be in the works. In fact, a new survey of supply-chain managers by Gartner finds a third of respondents planning to move sourcing and manufacturing out of China by 2023.
The COVID-19 outbreak is one reason for the change, Gartner says. Others include uncertainties caused by the U.S.-China trade war, the resulting wave of tariffs on imports, and a new emphasis by companies on supply-chain resilience.
“Global supply chains were being disrupted long before COVID-19 emerged,” said Kamala Raman, senior director analyst with the Gartner Supply Chain Practice. “Already in 2018 and 2019, the U.S.-China trade war made supply-chain leaders aware of the weaknesses of their globalized supply chains, and question the logic of heavily outsourced, concentrated and interdependent networks. As a result, a new focus on network resilience and the idea of more regional manufacturing emerged.
“But this kind of change comes with a price tag,” Raman added, noting that 58% percent of respondents believe greater resilience means additional structural costs to networks.
As a result, she said, U.S. companies will need to adopt new types of automation in the factory to reduce the cost of near- or onshore production. “Some also favor a partial option, such as manufacturing in Asia and moving only the final assembly closer to the customer,” Raman said.
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