73% of companies have significantly changed their supply chain networks in the past two years. These adjustments are driven by building resilience and flexibility rather than simply cutting costs.
Gartner surveyed over 400 senior supply chain executives worldwide to understand their current strategies. The data showed that risk management, including building resilience and flexibility, has surpassed cost-cutting as the primary driver of supply chain changes.
“Supply chain leaders are moving away from an overreliance on low-cost networks and are instead focusing on diversified approaches to mitigate risks and enhance performance.” said Vicky Forman, senior director analyst in Gartner’s Supply Chain practice.
“While cost-efficiency is still a prominent concern, CSCOs are taking a wider view of the costs associated with the impacts from disruptions and poor levels of resiliency when making network design changes,”
The most common supply chain changes involved adding new locations with existing or new partners.
90% of companies that made these changes reported meeting or exceeding their goals, including improved service, cost savings, agility, and sustainability. This success suggests that more changes are likely as companies adopt a ‘globalisation’ strategy combining near-shoring and diversified sourcing.
Even though many companies have expanded their supply chain networks, they still face challenges in new locations. These challenges include logistics issues, labor shortages, and regulatory complexities, which vary by region.
These regional differences highlight the importance of considering factors beyond cost when choosing new locations. If not carefully assessed beforehand, labor shortages and regulatory complexities can add significant costs.