Executive Briefings

Reducing Costs, Avoiding Risk Cited as Main Reasons Why Companies Move to Domestic Suppliers

To address supply chain threats, 28 percent of respondents in a recent survey said they have shifted from overseas to domestic suppliers in the past 12 months, according to BBK, an international business advisory firm with roots in the automotive manufacturing industry. Nearly 70 percent of these respondents cited transportation, shipping and logistics costs as the most significant factors in decisions to re-shore.

"We've seen a greater focus on reducing non-production costs and eliminating potential delays by using domestic suppliers," said William G. Diehl, CEO at BBK, whose company conducted the survey in partnership with Penton Research and IndustryWeek. "Though there's value in implementing re-shoring initiatives, we know that effective application is the key to successful risk mitigation."

Even though manufacturers are taking steps to strengthen supply chains, more than half of those surveyed felt that they did not understand the performance of their tier 1 and tier 2 suppliers well enough to adequately assess financial viability. "Blind spots around the financial and operational viability of suppliers pose a tremendous risk to the supply chain and set the foundation for major capacity constraints," Diehl said. "These constraints can hinder not only the growth of individual companies, but of industry segments as well."

More than one-third of survey respondents said that over the past 12 months they had to halt or delay production due to supply chain capacity and/or resource issues. Some 84 percent of those impacted cited late deliveries and 55 percent said they paid premium shipping costs due to production stoppages.

"Disruptions to the supply chain can cause expensive delays and reduced profitability," said Diehl. "Through our work with some of the largest automotive companies in North America, we have developed a deep understanding of supplier risk management. The most important elements of a healthy supply chain are integration and transparency through improved communication, reporting and financial analysis of suppliers."

The BBK IndustryWeek survey was conducted between July 11 and July 19, 2013 and included responses from 374 manufacturing executives in a broad range of industries on various supply chain-related issues and potential concerns. To download the BBK/IndustryWeek Supplier Risk Survey, click here.

Source: BBK

"We've seen a greater focus on reducing non-production costs and eliminating potential delays by using domestic suppliers," said William G. Diehl, CEO at BBK, whose company conducted the survey in partnership with Penton Research and IndustryWeek. "Though there's value in implementing re-shoring initiatives, we know that effective application is the key to successful risk mitigation."

Even though manufacturers are taking steps to strengthen supply chains, more than half of those surveyed felt that they did not understand the performance of their tier 1 and tier 2 suppliers well enough to adequately assess financial viability. "Blind spots around the financial and operational viability of suppliers pose a tremendous risk to the supply chain and set the foundation for major capacity constraints," Diehl said. "These constraints can hinder not only the growth of individual companies, but of industry segments as well."

More than one-third of survey respondents said that over the past 12 months they had to halt or delay production due to supply chain capacity and/or resource issues. Some 84 percent of those impacted cited late deliveries and 55 percent said they paid premium shipping costs due to production stoppages.

"Disruptions to the supply chain can cause expensive delays and reduced profitability," said Diehl. "Through our work with some of the largest automotive companies in North America, we have developed a deep understanding of supplier risk management. The most important elements of a healthy supply chain are integration and transparency through improved communication, reporting and financial analysis of suppliers."

The BBK IndustryWeek survey was conducted between July 11 and July 19, 2013 and included responses from 374 manufacturing executives in a broad range of industries on various supply chain-related issues and potential concerns. To download the BBK/IndustryWeek Supplier Risk Survey, click here.

Source: BBK