Firms should look to local sourcing to avoid events like the blockage of the Ever Given in the Suez Canal © Satellite image (c) 2021 Maxar Technologies
Firms should look to local sourcing to avoid events like the blockage of the Ever Given in the Suez Canal © Satellite image (c) 2021 Maxar Technologies

'Majority of supplier bases to be local in three years'

Will Green is news editor of Supply Management
5 January 2023

The geographic distribution of supplier bases is set to fundamentally shift from being mostly global to majority local by 2026 because of economic and geopolitical instability, according to a report.

The report, by Capgemini, said 25% of global trade will relocate in the next three years, resulting in the current split between global and local suppliers – 57% to 43% respectively – being exactly reversed.

“Organisations are pivoting their supply chains towards more local and regional suppliers and manufacturers,” said the report.

Houssam Hage, senior vice president of supply chain at carmaker Stellantis, who contributed to the report, said: “Stratetic sourcing may be considered as local, to ensure there is no dependence on any war-constrained countries or vulnerability to supply chain disruptions, such as the recent blockage of the Suez Canal.”

The research, based on a survey of 1,000 supply chain executives at large organisations in consumer products, retail, manufacturing and life sciences across 13 countries, found 92% said the ongoing relocation of the global supply chain would impact them, but just 15% were equipped to deal with this.

Some 45% said their supply chain cost base had increased over the past three years to improve resilience, sustainability, and customer-centricity.

Capgemini said “supply chain masters” – representing 9.5% of respondents and defined as having displayed the ability to successfully balance multiple demands on their supply chain – achieved 15% higher revenue growth compared to the others.

Mayank Sharma, global supply chain lead at Capgemini, said: “The last few years have highlighted the need for organisations to build agile and resilient supply chains, not only to cope with disruptions but also to help them stay ahead of the curve, especially from a sustainability perspective.

“It is clear that there’s no one-size fits all solution, but organisations that lay the foundation for a data-driven, technology-enabled, scalable, and sustainable supply chain are the ones that will reap the most impressive returns in terms of driving improved customer loyalty, creating more business value and meeting sustainability goals.”

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