Supply chains are ever-evolving and in the last few years, companies are stockpiling inventory, fighting for workers, and trying to keep up with the consistent changes in supply and demand. This new sort of globalization is prioritizing doing business with people you can rely on and has a focus on security as opposed to efficiency.
With these changes, major global supply chain leaders are evolving their strategies to include:
- Dual sourcing raw materials and increasing supplier bases: Fully 81% of supply chain leaders surveyed by McKinsey this year are now sourcing raw materials from two suppliers, rather than depending on merely one¹.
- Increasing inventory throughout the supply chain: Larger inventory is becoming a necessary response to supply chain risks in perpetuity and it enables companies to prepare for a potential lack of supply.
- Regionalizing and nearshoring the supply chain: The pattern of multinational investment has been inverted: 69% is from local subsidiaries reinvesting locally, rather than parent firms sending capital across borders². Leaders are bringing operations back to their own locale in order to streamline production.
What You Should Look For in a Supplier
- Investment practices: Capital expenditure is an important factor in the manufacturing sector to maintain present operating levels as well as sustain future growth. Companies that are not investing may not be able to continue with business as usual if their equipment becomes outdated or obsolete whereas a company that continually invests is increasing production capacity and overall reducing long-term costs.
- Multi-sourcing: Gone are the days of sole sourcing. As global supply chains are constrained, giving all of your business to one supplier is no longer feasible. It is essential to have backup and redundancy in case the supply chain of one supplier becomes affected.
- Supply chain localization: The primary benefit of a local supply chain is its agility and the ability to adjust to changing market conditions with ease. It also offers a more efficient means of production as companies do not need supplies from all around the country or even the world.
- Long-term contract availability: Secure your business with your top suppliers by entering long-term contracts. Spelling out the details from the beginning gives you the security and reassurance that your supplier is able to meet your needs throughout the contract duration as opposed to a job-by-job basis.
Supply chains all around the world have been slowed and the strategy around sourcing has changed. As these circumstances continue to evolve, so should your approach.
¹The Economist, The Structure of the World's Supply Chains is Changing, June 2022
²The Economist, The Tricky Restructuring of Global Supply Chains, June 2022
As a nationally recognized book printer in North America, Bradford & Bigelow is consistently looking at ways to invest and strengthen our existing supply chain with new equipment, additional supplier partnerships, and more (read more about it). If you'd like to partner with a reliable and predictable supplier, let's talk about your next project.