Kamala Raman, vice president and team manager at Gartner, outlines factors driving companies as they struggle to balance operating models in challenging times.
“I emphasize that it is partly about [companies’] physical footprint and partly about the operating models that go with those footprints in order to truly set up a resilient supply chain for the long run,” Raman says.
There are several operating models, Gartner research shows, including low-cost regional sourcing, then selling to customers in Western markets; regional ones with two or three different sourcing or manufacturing locations around the world; hybrid approaches, such as sourcing in certain parts of the world where some components may be available or raw materials may be manufactured; final assembly or postponement closer to market; localized models, where there’s autonomy to design products to fit local needs, and token investments in local markets to meet regulatory requirements.
Control of the supply chain is crucial, Raman says. “When we look at strategic actions companies are taking to improve control, those range from relationships and partnerships with suppliers or even key customers, vertical integration of supply chains to perhaps take over some production capabilities that have been outsourced, and also acquiring intellectual property or new skills. All of this is to regain a little bit more control over what is sourced and made.”
Preliminary findings of recent research show great interest in nearshoring, and companies already are in regional, hybrid or localized operating models. “Everybody wants to have a little bit more resilience by way of having two or more suppliers,” says Raman. “We are seeing people that have already made changes to nearshore or shrink the length in their supply chains.”
Nevertheless, she says, there's always a larger percentage who are interested in diversifying their supply chains or nearshoring versus those who say they have actually executed on that.
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