An article published by McKinsey & Co. in August observed, “over the past year, many companies have made structural changes to their supply networks by implementing dual or multiple sourcing strategies for critical materials and moving from global to regional networks.”
This structural change pivots on the difference between low cost and best cost. The shift extends through Tier 1 Suppliers through lower tiers. The intent of a low-cost supply chain strategy is to present a low price to customers. A best-cost strategy adds factors beyond cost to the equation, like risk, lead time, and responsiveness.
The McKinsey article continues, “Ninety-seven percent of respondents [to the survey] say they have applied some combination of inventory increases, dual sourcing, and regionalization to boost resilience.”
We offshored, losing sight of the associated risk, for decades. Time to learn what near-shore, re-shore, regionalization, and localization mean.
