6 Reasons Why Global Supply Chains Are Shifting
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6 Reasons Why Global Supply Chains Are Shifting

Political risk, emissions and lead times are just some of the drivers pushing companies toward onshoring, nearshoring and friendshoring decisions.

Edwin Lopez
Supply Chain Dive, 2023
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Following the pandemic and other disruptions, many companies are taking steps to improve and often shorten their supply lines. Bordering countries, such as the United States, Canada and Mexico, are making more efforts to “nearshore, friendshore and onshore” manufacturing. As Edwin Lopez reports in Supply Chain Dive, the multiple factors that influence corporate supply chain decisions range from reducing costs to mitigating risks of all kinds, whether climate related (drought affecting the Panama Canal) or geopolitical (Houthi attacks in the Red Sea). Lopez explains six factors companies are considering as they adapt their supply chains to deal with constant change.   

Summary

1. Six major factors influence corporate supply chain decisions, beginning with cost. 

Multiple factors shape corporations’ decisions to maintain or change their supply chain. Interviews with experts found six major decision points, starting with cost. 

Supply chain costs have risen everywhere, due to a variety of pressures, including extended supply lines, trade wars, inflation, freight costs, regional conflicts, and increased wages in manufacturing centers like China and Mexico. Other cost factors include tariffs, transport time and cost, and environmental impact. Such issues have inspired a movement to “reshore” supply chains.

2. Tariffs and other regulations exert pressure on supply chains.

Former president Donald Trump enacted tariffs to use as leverage in global trade negotiations and to create a disincentive for companies to procure goods in certain foreign markets.

President Joe Biden kept Trump’s 25% duty (section 301 tariffs) on products from China. The tariffs became a major reason for companies to stop producing in China and generated billions in incentives for manufacturers...

About the Author

Edwin Lopez is the managing editor for Industry Dive. He is also responsible for the daily operations and strategy at Supply Chain Dive, Transport Dive and Manufacturing Dive.

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