Nearly three-quarters of business executives report that strategic shoring has successfully enhanced supply resilience and operational agility. This is according to a new report, The Proximity Premium, released on October 8 by KPMG LLP.
“Business executives are re-evaluating their supply chain assumptions with a primary focus on regional and domestic sourcing and distribution to mitigate geopolitical and economic uncertainty, said Jean-Pierre Trouillot, Latin America Regional Advisory Leader, KPMG Americas. “Companies are seeing strategic shoring as a way to improve supply resilience and operational agility, offering them the benefits of proximity, cost efficiency and access to resources." The survey found that 55% of executives view resilience and faster time to market as the dominant objectives pushing their companies to nearshore.
The Americas' share of supply chains to the U.S. is expected to rise by 16%, while the average number of locations in a single supply chain is being consolidated for efficiency measures, falling from 2.7 to 2.4 locations over the next three years.
The volatile global trade environment is also a factor, as 61% of executives reported that the this is forcing their business to refocus on regional and domestic sourcing and distribution.
Another issue is the tax implication of sourcing. “Companies don't always consider tax as part of their overall strategic supply chain cost assessment,” said Doug Zuvich Latin America Regional Managing Partner, Tax and Legal. “This could be a big miss. A tax-first mindset, combined with a data-driven, connected thinking approach, can aid business executives to better understand how different factors interact and impact supply chain decisions."
The survey found that:
- Executives report that the current tax environment (23%) and regulatory policies (31%) are among the top five challenges to achieve certain strategic shoring initiatives.
- 53% of executives say that regulators and tax officials are significant influences on their strategic shoring decisions - second only to shareholders, at 56%.
Strategic shoring is attaining it’s goal as 73% said they are seeing an increase in cost efficiency, 61% say strategic shoring will help reduce the carbon footprint attached to products and 75% of executives say their company has successfully used strategic shoring to strengthen its supply chain resilience.
