The Supply Chain is Going Local & “Tech-Local”
For many supply chains, moving from a global network of sourcing, production, and distribution to local ones is no easy task — even as the global pandemic and geopolitical trade tensions are pushing us all towards these outcomes. Many nations (and their corporate partners of all sizes), in terms of industrial policy, are beginning to impose tariffs on imports are building local supply chains to all but replace far-flung and fragile supply networks. Local supply networks are being built by large companies thereby eschewing outsourcing production and bringing their supply chains closer to home. “Reshoring” is the new catchphrase. In addition, companies are relying on new technologies that can help reduce the dependencies on production facilities from single sources. This is particularly true for companies that rely on products that are not necessarily available in every region. Some companies are said to be exploring ways to localize supply chains using 3D printing, even though most have not yet used the technology as their primary means of production. Other new technological paradigms include foci on the circular economy and on carbon-reducing implementations of production and distribution.
This trend is growing, with automation and small-scale production becoming so important that a number of countries are beginning to move parts of their supply chains home. This raises questions about how populations are dependent on distant suppliers in countries and regions for life necessities such as sustenance, nutrition, medicine, and health care equipment. Policymakers may come under increasing pressure to consider whether certain products need to be made in their country or region. Some corporates obviously now seeking government support to boost production in-country or nearby.
In the midst of all this doom and gloom, there are bright spots as technology-enabled pioneers and disruptors forge new local supply chains during the current crises. Some interesting examples can be seen in local food distribution. As such, executives and policymakers are rethinking where customer demand will be and where companies should locate their production to meet that demand. These changes will affect all ends of the supply chain, and stakeholders need to re-evaluate where customer demographics are, where customer demand is, and what impact these changes could have on supply chains. Broader supply chain changes are still a key factor in why companies locate production in one place or another — including “reshoring.” Whether the body blows are from public health concerns, changing target segment preferences or demands including environmental concerns, or from geopolitics in the age of renewed populism, corporations and polities must embrace change and even explore cutting-edge tech solutions- whether small-scale or large-scale in the degree of disruption and change achieved.