skip to Main Content
Global Companies Plan More Regional Approaches To Manufacturing, Selling

Global Companies Plan More Regional Approaches to Manufacturing, Selling

Global Companies Plan More Regional Approaches to Manufacturing, Selling

A new report from Accenture finds that the number of companies nearshoring product manufacturing will double in three years’ time. (Photo: Getty Images) Global Companies Plan More Regional Approaches to Manufacturing, Selling What Does it Take to be a Supply Chain Visionary? The 10 Questions Supply Chain Managers Must Ask Before Engaging With a New Vendor Gartner Analyst: Steps CSCOs Can Take to Bolster Cyber Defenses Inventory Optimization, It’s Complicated More News Inventory Optimization, It’s Complicated Master the Art of Inventory Optimization in the Post-Pandemic World. Register now for our Webinar! All Resources By In September, global third-party logistics behemoth C.H. Robinson announced a new 400,000-square-foot cross-border facility in Laredo, Texas. The facility increased the company’s presence in the region to 1.5 million square feet. But, C.H. Robinson is merely responding to what has been an unprecedented surge in manufacturing in Mexico. In the first six months of 2023, freight volumes moving into the U.S. increased 20% , Mike Burkhart, C.H. Robinson’s vice president for Mexico, told Supply Chain Management Review. In August, an AlixPartners put further data behind the trend. Noting nearshoring was being helped by the passage of new regulations and legislation in the U.S., including the CHIPS Act , Infrastructure Investment and Jobs Act , Inflation Reduction Act , and the Build America, Buy America Act as well as the introduction of tariffs in the 2018 to 2020 timeframe on imported goods from China to the U.S., the firm pointed to an acceleration of the trend in recent years. “These incentives and policies should be viewed as strategic funding support, which, when coupled with automation, can bring down the cost of procurement and reductions in tariff and freight expenses,” it said, adding that “the U.S. may be at the beginning of a nearshoring revolution as the total-cost-and-risks-of-ownership (TCRO) equation in a disaggregated supply chain is being re-written by technological advancements (AI/generative AI and automation) along with policies and regulations.” Now, another report, this one by global consulting firm Accenture, backs up that assertion and points to how large the nearshoring trend, not only in the U.S., but globally, could become. According to the report , regional sourcing and production are important to becoming less vulnerable to disruption, it said, and companies must also increase their digital maturity. The survey of 1,230 senior executives in 14 countries (350 from the US) and 11 industries in the first quarter of 2023, found that 85% of companies plan to manufacture and sell most of their products in the same region in 2026. Today, that number is 43%. In the U.S., 91% of companies intend to accomplish this, up from 52% today. In addition, sourcing regionally will almost double to 65% by 2026, up from 38% today. That number, at 50% currently in the U.S., is expected to grow to 82% by 2026. U.S. companies are investing an average of $65 million in reshoring and production facility relocation this year, and expect that to accelerate to $188 million by 2026. “When disruption struck, many companies quickly applied short-term fixes to their complex global production and supply networks,” said Sunita Suryanarayan, global supply chain and operations resiliency lead at Accenture. “These networks had been designed for cost efficiency and just-in-time deliveries. Now is the time to strategically redesign them for multi-sourcing, without creating unwieldy silos or new bottlenecks, and make them more transparent and agile with data and AI to drive sustained resiliency.” The need to bring sourcing and production closer is in response to the supply chain disruptions that have occurred over the past few years. Accenture found that $1.6 trillion in revenue was lost as a result of external events, including geopolitical shifts, extreme weather, and shortages of materials and talent. To mitigate future revenue loss, companies are increasingly turning to technology. On average, companies are investing $1 billion in 2023 to digitize, automate and relocate supply and production facilities, which is expected to increase to at least $2.5 billion in 2026, according to the report. “Resiliency has become an opportunity for growth, not just a strategy for survival. Taking advantage of this opportunity requires companies to drive the digitization of engineering, supply, production and operations processes,” Sef Tuma, global engineering and manufacturing lead, Accenture Industry X. “Solutions like digital twins and technologies like generative AI can help companies adapt faster to sudden changes and take data-driven, real-time actions.” The most resilient companies achieved revenue 3.6% higher than their most vulnerable peers. To increase resiliency, Accenture recommends increasing visibility, […]

Click here to view original web page at Global Companies Plan More Regional Approaches to Manufacturing, Selling

Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

Leave a Reply

Back To Top