Supply chains are in the global spotlight likenever before. With inflation and economicuncertainty following from pandemic shutdowns,managing supply chain disruption hasbecome a normal part of doing business.
At the same time, companies are recognizingthat supply chain operations are a key part ofthe drive to reduce carbon emissions. As theyadapt their supply chains in response, companiesare also having to manage a massive talentshortage in manufacturing.
With all these challenges racking up, it’s notsurprising supply chains are top of mind for manufacturingexecutives. The National Association ofManufacturers’ new survey on the biggest challengesfacing manufacturers shows that 78% ofmanufacturing leaders indicate supply chain disruptionas a primary business challenge. What’smore, despite a generally positive outlook for theirbusinesses overall, only 10%of these leaders thinkcurrent supply chain disruptions will improve bythe end of this year.
Reframing thesupply chain footprint
This persistent disruption is driving companies torethink some of their most fundamental assumptionsabout global manufacturing. Resilience,flexibility, and sustainability are now the watchwordsfor supply chain managers. As such, thefocus is switching away from low-cost offshoringand just-in-time manufacturing towards greateronshoring and nearshoring (“reshoring”), especiallyin the United States.
The striking findings of a recent Accenturesurvey bear this out. It found that 94% ofNorth American companies are now planning toinvest directly in onshoring or nearshoring. Andmore than half of all supply chain and manufacturingexecutives think building manufacturingcapacity closer to home is essential for theircompanies’ survival.
Specifically, a large majority (85%) wanttheir factories and material sources to be inthe same hemisphere. Nearly as many (78%)want factories within four time-zones of thecustomer. And more than half (52%) want themless than 1,000 miles away.
This is a very different way of thinking aboutsupply chains than we’ve been used to. In fact, onlya tiny minority—1%—of companies believe theycan continue to grow revenues and profits withintheir existing manufacturing footprint.
A different kind of supply chain
With findings like these, wide-scale change insupply chains is inevitable. But reshoring is onlypart of the equation. With the focus on greaterproductivity and efficiency as well as flexibilityand resilience, many companies are looking tomake their newly reshored factories far moredigital and automated.
In fact, more than half of the companiesAccenture surveyed said they’re combininglarge-scale digital transformation with theironshoring and nearshoring initiatives. This alsohas implications for workforce skill requirements.Automation and robotics need new kinds of techniciansto support them, as well as data scientistsand analysts to make use of all that valuable newsensor and supply chain data.
Such skills are already in high demand. In fact,two in five respondents to Accenture’s survey saidautomation and robotics technicians are the hardestroles to fill. And three-quarters of companiesin the NAM survey said attracting and retaininga quality workforce was a key business challenge.
The implication? First, companies need to shiftautomation up a gear to address persistent manufacturingtalent shortages. Second, they’ll need torethink their approach to talent acquisition andretention to ensure they have the skills needed.For most, that will include a significant programof upskilling the existing workforce in key digital,automation, and data capabilities.
The next phase of supply chain
Manufacturers that can manage this transitionquickly and smoothly are poised to transformtheir supply chain agility and resilience as wellas their sustainability and competitive advantage.This is especially important as they continuethe shift towards direct-to-consumer ande-commerce sales models.
For example, reducing freight emissionsthrough reshoring can be a key weapon in reducinga company’s carbon footprint. And the greaterflexibility provided by strategically siting highlyautomated facilities will be crucial in meetinggrowing demand for more personalized products,services, and experiences that can be tracked inreal time and delivered exactly when and wherethey’re needed.
To meet these new requirements and expectations,supply chains need to be transformedand rearchitected. Ultimately, it’s about puttingaside the traditional view of the supply chain asa cost center. It now needs to be seen as a vitalsource of future growth, profit, and competitiveadvantage—as well as a enabler of more customercenteredand sustainable operations.
