AMR Research today released a study that found the United States and China are the regions that present the most supply chain risk for manufacturers. The United States was the top geography cited for supply chain risk at 35%, with China at 28%, and the Middle East and Africa at 12%.
In addition to geographies with the highest risk, the report identified rising transportation costs (51%), volatile commodity prices (43%), and weakening consumer spending (37%) as top supply chain concerns.
In the wake of ever-increasing supply chain volatility, companies have begun seeking a more balanced portfolio by moving to new regions, namely other Asian-Pacific countries, Eastern Europe, and near-shore countries. Survey respondents indicated that despite rising transportation costs, an aging logistics infrastructure, and a softening economy, many companies are still sourcing and manufacturing in the U.S.
Keeping manufacturing close to home allows companies' better visibility into their supply chains and increased oversight into day-to-day operations. 34% of companies are planning to near-shore their sourcing and manufacturing due to increasing cost-competitiveness, while 15% indicated lessened supply chain risk due to proximity to market as their primary reason to near-shore.
"Globalization is coming home partly because so much risk is associated with spreading the supply network around the world," explained Noha Tohamy, research director at AMR Research.
But for manufacturers selling products in the U.S., the lure of China still exists. Despite significant risks, like product quality issues and political unrest, China still makes sense because of cost advantages (49% of respondents that plan to source from China cite lower labor costs as their primary reason) and reach to vast consumer markets. To further mitigate risk, companies have begun building better IT-based supply chain visibility (42%), employing multisourcing strategies (27%), and building performance-based collaborative relationships with suppliers (44%).
Timely, incisive articles delivered directly to your inbox.