Minimize Your Supply Chain Risks: Another Idea

Now that we have explored risks utilizing an Asian Supply Chain can your company support a conservative supply chain strategy which would provide most protection to risks in your supply chain? Let’s explore if a regional or near shore supply chain strategy can be utilized as a model in your supply chain.

Regional Domestic Supply Chain would be defined as having your key components, sub assemblies or assemblies manufactured or supplied in the same region as your factory or distribution points to support your customer base. For example, if your business was located in the United States, the majority of your critical supply base would also be located in the United States. As an example, you could have a blended approach with key manufacturing operations that contain “intellectual property” within your company’s factory network while other key components and assemblies which support the factory provided by a network of regional supply chain suppliers.

The key driver in a regional supply chain would be the ability to provide a much shorter recovery period to a disrupted supply chain typically in days vs. weeks based on deliveries anywhere in the region with minimal transportation uplift costs. However, a determining factor in all likelihood is can your company financially support a regional supply chain model to offset the minimized risks?

Near Shore Supply Chain would be defined as having your key components, sub assemblies or assemblies manufactured or supplied in same continent as your factory or distribution points to support your customer base. For example, if your business was located in the United States, the majority of your supply base, factory or suppliers could be located in Mexico. Mexico is certainly a “low” cost supply chain solution maybe not quite as financially attractive as an Asian supply chain however a near shore supply chain would be able offer better recovery times for a disrupted supply chain. Again recovery for a disrupted supply chain flow could be days vs. weeks. A near shore supply chain strategy used in combination of a regional supply chain strategy could offer an attractive cost benefit while minimizing your supply chain risks. In any case, a Near Shore or Regional Supply Chain or a combination of the two should be a key consideration in designing a supply chain for your company.