The ability to utilize data and analytics to identify and monitor risk allows for efficient and optimized operations throughout the entire supply chain. Companies are increasingly turning to digitized solutions to streamline their management, tracking and modeling.
Other advancements, such as 3-D printing, help reduce risks and costs of production, improve production times and quality, and allow for the ability to rapidly prototype. According to a study by Gartner, 47% of supply chain managers plan to implement 3-D printing in the next couple years.
In addition to emerging technologies, a wave of new, unique systems will develop in the supply chain, based on differing cultures and nationalities found within various regions. For example, the way consumers purchase goods in the U.S. is revolutionizing the retail supply chains. In fact, the American Transportation Research Institute’s (ATRI) study on trucking hauls in the U.S. shows that truck trip distance has shrunk by 37% since 2000, due to e-commerce.
For instance, Enphase, a California-based global energy technology company and solar microinverter supplier, added production lines in Mexico to supplant their Asian lines and not only mitigate risk from possible U.S. tariffs, but also to meet North America customers faster, while increasing visibility into production.
THE COMPLEXITIES TO CONSIDER
Although the positive outcomes resulting from post-globalization are undeniable, there are widespread concerns to consider, including the lack of visibility, and the local availability of supplies and parts in certain regions. Offshore outsourcing has been the standard model for years, which has created tremendous manufacturing muscle and parts availability in countries like China, but there can be a knowledge gap as manufacturing moves to more local facilities. Balancing resources and expertise between the go-to regions and those less equipped to handle globalization will be our new challenge.
Transitioning to onshore production, Enphase and other companies in a similar position can improve transparency at the regional level, as time and distance are less significant factors.
Manufacturers also need to consider an extended supply chain network. Full visibility and influence over suppliers, as well as the entire supply chain itself, will be essential to thrive in a regional market. By maintaining control, companies can better anticipate demand for their inventory, reducing the likelihood of producing excess product.
Rising complexities with diverse requirements for products will force manufacturers to work harder, breaking away from longstanding reliance on offshore partners. To support the growth in a regional manufacturing system and ensure efficient distribution, a smaller, more flexible supply chain becomes most attractive.
While regionalization will not solve all the issues brought on by globalization, it will allow new regions to become leaders in the space, such as Mexico, Eastern Europe, or India. Companies will need to weigh the factors presented by the modern landscape to decide for themselves what locations make the most sense for their markets.
In the short term, manufacturers and suppliers will begin to form new relationships to create smart, regional supply chains. Sensor-enabled technology platforms will allow real-time data analytics that monitor the output and send alerts if and when issues may occur. This visibility offers more information than ever before, speeding the flow of products, which ultimately saves money and minimizes downtime.
Supply chain complexity will also increase in the short to medium term, due to factors including offshore production of critical components; the necessity of replicating assets; and an increasing overall network of the chain. This will put more pressure on supply chain experts to ensure the supply chains are managed efficiently. However, over time it is more likely that the end-to-end supply chain will be simplified and shorter, while still maintaining customization and speed. Regional supply chains will have the ability to determine where the product needs to end up, while simultaneously managing the proper end goals of the product.
Additionally, manufacturing will be scaled in certain regions, and line automation will be optimized as we see manual workers turn into skilled technicians. The future of regionalization in the supply chain is bright; however, it will be a long journey. By partnering with manufacturers that have operations in many countries, customers will take advantage of regionalization and deliver on their customers’ high expectations.
Marcin Fic is vice president, supply chain solutions, with Flex, a global electronics manufacturer.