It should come as no surprise to manufacturers that China is one of the riskiest places to source product from a supply chain perspective. Along with that country's low cost of labor comes a host of potential problems related to distance, supplier reliability and infrastructure. But one other nation tops China in the area of risk, according to a new study by AMR Research: the United States. Some 35 percent of manufacturers polled by the firm cited the U.S. as the number-one geography for supply chain risk, compared with 28 percent for China and 12 percent for the Middle East and Africa. Worried about the volatility caused by single-sourcing, companies have begun diversifying their supply base by moving to other Asia-Pacific countries, Eastern Europe and near-shore locations, AMR says. The survey finds that 34 percent of companies are planning for near-shore sourcing and manufacturing in order to boost their cost-competitiveness, while 15 percent are taking that step to lessen supply chain risk. In addition, many companies continue to source and manufacture in the U.S., despite rising transportation costs, an aging logistics infrastructure and a weakening economy. "Globalization is coming home partly because so much risk is associated with spreading the supply network around the world," says AMR research director Noha Tohamy. At the same time, she says, China continues to make sense as a source of manufacturing because of its cost advantages and access to vast consumer markets. To mitigate the risks involved, companies have been adopting better supply chain visibility technology, embracing multi-sourcing strategies and crafting performance-based relationships with suppliers.
Timely, incisive articles delivered directly to your inbox.