By Mark Clouse, Per Kristian Hong, Omar Troncoso and Patrick Van den Bossche ·
July 6, 2022
For decades, major North American companies have been playing the equivalent of golf’s long game by operating global supply chains extending over vast distances. But several years of trade wars and tariffs, successive waves of COVID and Russia’s invasion of Ukraine have made the vulnerability of global supply chains vividly clear. Companies continue to struggle through ongoing supply disruptions, congested ports and skyrocketing charges—the average cost of transporting a container rose from $1,362 in November 2019 to between 10 times and 15 times that amount at the height of COVID. It was still hovering around $9,600 early in 2022. At the same time, demands on supply chains are heightened as consumers and customers expect more timely delivery and more personalized service.
Today’s turmoil is triggering the biggest remaking of the global operating environment in our lifetime. Kearney’s Global Business Policy Council warns that prolonged conflict and retaliatory economic sanctions may lead to a fragmentation of the post-Cold War global economy into regional hubs shaped by national ideology.
The challenges ahead demand much more than adjusting a few dials. We believe the most successful companies will use the current crisis as an impetus to decisively restructure their value chains for resilience and agility, so that they can keep pace with—or better yet, stay ahead of—what will be an historic change in how markets are defined and operate. For all of these reasons and more, many companies are now strengthening their short game to make the cut and set the stage for
sustained success.
An executive survey conducted in March 2022, in conjunction with Kearney’s annual Reshoring Index benchmark study, suggests that a shift toward reshoring and nearshoring operations is imminent: 92% of manufacturing executives and 78% of CEOs said that they have considered reshoring or have already reshored some manufacturing operations to the United States. Intriguingly, 81% of U.S. manufacturing executives and 62% of CEOs say that seeing other U.S. companies reshore or nearshore would influence them to follow suit (see Figure 1).
By Mark Clouse, Per Kristian Hong, Omar Troncoso and Patrick Van den Bossche ·
July 6, 2022
For decades, major North American companies have been playing the equivalent of golf’s long game by operating global supply chains extending over vast distances. But several years of trade wars and tariffs, successive waves of COVID and Russia’s invasion of Ukraine have made the vulnerability of global supply chains vividly clear. Companies continue to struggle through ongoing supply disruptions, congested ports and skyrocketing charges—the average cost of transporting a container rose from $1,362 in November 2019 to between 10 times and 15 times that amount at the height of COVID. It was still hovering around $9,600 early in 2022. At the same time, demands on supply chains are heightened as consumers and customers expect more timely delivery and more personalized service.
Today’s turmoil is triggering the biggest remaking of the global operating environment in our lifetime. Kearney’s Global Business Policy Council warns that prolonged conflict and retaliatory economic sanctions may lead to a fragmentation of the post-Cold War global economy into regional hubs shaped by national ideology.
The challenges ahead demand much more than adjusting a few dials. We believe the most successful companies will use the current crisis as an impetus to decisively restructure their value chains for resilience and agility, so that they can keep pace with—or better yet, stay ahead of—what will be an historic change in how markets are defined and operate. For all of these reasons and more, many companies are now strengthening their short game to make the cut and set the stage for
sustained success.
An executive survey conducted in March 2022, in conjunction with Kearney’s annual Reshoring Index benchmark study, suggests that a shift toward reshoring and nearshoring operations is imminent: 92% of manufacturing executives and 78% of CEOs said that they have considered reshoring or have already reshored some manufacturing operations to the United States. Intriguingly, 81% of U.S. manufacturing executives and 62% of CEOs say that seeing other U.S. companies reshore or nearshore would influence them to follow suit (see Figure 1).
July 6, 2022
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