A Manufacturer's Resolution: Address Supply Chain Chokepoints Like the Panama and Suez Canals

Summary

The last few months have been awash with global chokepoints that are significantly impacting the ability of manufacturers to get products and materials in a timely fashion. From drought in the Panama Canal, to rebel attacks on commercial containers in the Red Sea, or queues mounting in the Suez—organizations with globally dispersed supply chains are feeling the crunch.
 
Organizations the size of IKEA, Abercrombie & Fitch, and BP have gone on record with issues around supply from shipping shocks. So it’s no surprise that large enterprises are looking back home to make their supply chains more resilient.

Reshoring: An opportunity for companies to embrace a more circular economy

Research commissioned by IFS, polling senior decision-makers working for large enterprises globally, finds that 72% have increased their usage of domestic suppliers, compared to international suppliers.
 
But then of course, the raw materials, components and end products that they source from suppliers are likely to become more expensive as result, especially as we see inflation gathering pace. In line with this, 53% have considered increasing the proportion of materials/components they produce in-house. But these measures and others like them that organizations are now taking to mitigate risk are likely to add cost, complexity and waste into the supply chain.
 
It’s the perfect opportunity for manufacturers to add the need to build sustainability into their processes. Why? They are doing all this at a time when the move to the circular economy is becoming a must for organizations worldwide, further adding to the pressure businesses are under, and when skills are in short supply.
 
Manufacturing businesses urgently need to find a solution that can help them to manage this disruption, to deal with escalating price volatility, transition to a circular economy and address the additional supply chain complexities from reshoring.
 
As so often, the business conundrum needs the helping hand of technology to deliver the agility, fast Time to Insight (TTI) that they need to better forecast demand and a more detailed view of sustainability across product supply chains. Exceptional supply chain management will be a vital part of the move to reshoring. So, it was heartening to find that the IFS study showed supply chain management was seen by 37% of respondents as one of the top three priorities their organization is trying to solve through technology investment.

What are the benefits?

In a recent Kearney index on manufacturing reshoring, 92% of executives express positive sentiments toward reshoring. And that’s no surprise when you consider the additional benefits on offer. Along with a more protected supply chain ecosystem, reshoring also offers societal benefits.
 
And it’s already started. According to the U.S. Reshoring Initiative, the private and federal push for domestic U.S. supply of essential goods propelled reshoring and foreign direct investment (FDI) job announcements to a record high. The projection of jobs announced in 2022 iwas around 350,000—a record high .

By addressing reshoring now with the right technology, efficiently and cost-effectively, manufacturers will put themselves in a great position to not only survive but also thrive long into the future.