A more resilient Supply Chain through relocation

06/01/2023

Strategic Relocation: Securing Your Supply Chain

Explore the benefits of supply chain relocation and overcome challenges with expert strategies. Build a resilient network that adapts to market changes.

In today's rapidly evolving global landscape, logistics managers like you are facing a tough challenge. With supply chain disruptions coming from pandemics, geopolitical tensions, black-swan events, and other disruptions, how do you build resilience into your supply chain?

Key takeaways

 

  • Supply chain relocation is a strategic response to global uncertainties, aiming to build resilience and reduce risks
  • Key motivations for relocation include securing supply, controlling costs, improving market proximity, and enhancing quality
  • Real-time visibility technologies are crucial for managing a relocated and diversified supply chain effectively
  • Strategic relocation can help mitigate tariff risks by diversifying production locations and taking advantage of free trade agreements
  • Working with an experienced logistics provider can provide valuable expertise and resources throughout the relocation process

One strategy that's gaining traction is supply chain relocation—moving your supply and manufacturing away  from more vulnerable countries. But, what does this actually mean for your business? What are the main considerations? How can you take advantage?

 

We'll explore:

 

  • The shifting mindset from globalization to strategic sourcing
  • The drivers of supply chain relocation
  • How to overcome the challenges associated with relocating parts of your supply chain
  • Mitigating tariff risks
  • Taking advantage of technology to drive supply chain visibility
  • Working with a logistics provider to help with relocation

 

We'll also discuss how working with the right logistics provider can help you design and implement a more resilient supply chain that meets your specific needs.

 

Let's get into it.

Production and sourcing sites

Embracing a new supply chain reality

The global business environment is in flux, characterized by rising tensions, supply chain disruptions, and economic uncertainties. These factors have prompted a significant shift in supply chain strategy:

 

• From lowest-cost suppliers to greater supply chain resiliency

• From globalization to diversifying your sourcing

• From distant manufacturing to nearshoring and friend-shoring

 

These changes don't mean you need to completely rethink your globalization strategies. Instead, it's about creating a more balanced, resilient approach to supply chain management that can withstand future disruptions.

Struggling with supply chain vulnerabilities? GEODIS offers expert guidance on relocation strategies tailored to your business. Talk to us now to explore your options.

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Why are businesses considering supply chain relocation?

Recent studies indicate that while China remains a crucial manufacturing hub, many companies are exploring options to diversify their supply chains. Here are the primary motivations driving this trend.

 

1. Secure your supply chain

By diversifying your sourcing and production locations, you can reduce dependency on a single region and mitigate risks associated with geopolitical issues or local disruptions.

 

2. Control logistics costs

Strategic relocation can help you optimize transportation routes and reduce overall logistics expenses, especially in the face of potential disruptions or tariff increases.

 

3. Improve proximity to customers

Nearshoring or friend-shoring can significantly reduce time-to-market, allowing you to respond more quickly to changing customer demands.

 

4. Enhance quality and efficiency

Relocating to regions with greater oversight can lead to improved product quality and operational efficiency.

 

5. Better inventory management

Closer production facilities can enable more responsive inventory management, reducing carrying costs and improving cash flow.

 

Overcoming relocation challenges: A strategic approach

While the benefits of supply chain relocation are clear, the process isn't without its challenges. Here are some of the main obstacles you might face and strategies to overcome them.

 

1. High relocation costs

 

  • Challenge: Moving equipment and setting up new facilities can be expensive
  • Solution: Conduct a thorough cost-benefit analysis, considering long-term savings and risk mitigation. Explore phased relocation approaches to spread out costs

 

2. Long-term investments in existing facilities

 

  • Challenge: You may have significant capital tied up in current manufacturing plants
  • Solution: Consider partial relocation strategies or repurposing existing facilities for other parts of your supply chain

 

3. Quality and capability concerns

 

  • Challenge: New locations may not immediately match the quality and capabilities of established manufacturing hubs
  • Solution: Invest in training programs and quality control measures. Work with local partners to build capabilities over time

 

4. Supplier transition

 

  • Challenge: Switching suppliers can be time-consuming and disruptive
  • Solution: Develop a comprehensive transition plan and consider maintaining relationships with current suppliers while gradually introducing new ones

 

5. Limited alternatives in other countries

 

  • Challenge: Some specialized manufacturing capabilities may be concentrated in specific regions
  • Solution: Explore innovative manufacturing technologies that could be implemented in new locations. Consider vertical integration where appropriate
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Mitigating tariff risks through strategic relocation

One of the key challenges facing supply chain managers today is the potential for increased tariffs. Strategic relocation can help reduce this risk.

 

1. Diversify production locations

By spreading production across multiple countries, you can reduce the impact of tariffs targeting specific regions.

 

2. Explore free-trade agreements

Relocate production to countries with favorable trade agreements to minimize tariff exposure.

 

3. Implement flexible manufacturing

Shift production between locations quickly if tariffs change. 

 

4. Use foreign-trade zones

Consider using foreign-trade zones to defer, reduce, or eliminate customs duties.

 

5. Stay informed on trade and tariff changes

Work with your logistics provider to stay updated on trade policies and adapt your supply chain strategy accordingly.

Concerned about tariff risks? GEODIS can help you develop a strategic relocation plan to mitigate these challenges. Get in touch to start securing your supply chain.

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Real-time visibility: A game-changer for relocated supply chains

Using real-time visibility solutions helps you manage your relocated and diversified supply chain more effectively. As you shift your supplier, manufacturer, and logistics bases, here's how visibility can help.

 

1. Enhanced traceability

Track your products from source to destination, enabling quick responses to disruptions or quality issues.

 

2. Improved risk management

Identify potential bottlenecks or disruptions early, allowing for proactive problem-solving.

 

3. Data-driven decision making

Use real-time data to optimize inventory levels, transportation routes, and supplier selection.

 

4. Better customer service

Provide accurate delivery estimates and proactively communicate any delays or issues to your customers.

 

5. Streamlined compliance

Easily access and share documentation required for customs clearance and regulatory compliance.

 

These technologies help you create a more agile and responsive supply chain, regardless of where your production facilities are located.

 

Working with a logistics provider to design a resilient supply chain

Dealing with the complexities of supply chain relocation requires expertise and resources. Working with an experienced global logistics provider helps to make the whole process easier!

 

1. Strategic planning and consultancy

A knowledgeable logistics partner will help you assess relocation options, considering factors like transportation networks, local regulations, and market dynamics.

 

2. Customized logistics solutions

Look for a provider that can offer tailored solutions focused on securing your supply chain, rather than just offering the lowest price.

 

3. Global reach with local expertise

The right logistics partner should have a global network combined with in-depth knowledge of local markets, helping you to navigate diverse regulatory environments.

 

4. Advanced technology integration

Look for a provider that offers cutting-edge technological solutions to enhance visibility, streamline operations, and drive efficiency across your supply chain.

 

5. Scalability and flexibility

As your business grows and evolves, your logistics partner should be able to adapt and scale their services to meet your changing needs.

 

Supply chain relocation is a complex but potentially transformative strategy for adding resilience to your global networks. Remember, the goal isn't to completely abandon globalization, but to create a more balanced approach that combines the benefits of global sourcing with the security of diversification and local expertise. 

Frequently asked questions about relocating your supply chain

The timeline can vary significantly depending on the scale and complexity of your operations. A partial relocation might take 6-12 months, while a full-scale relocation could take several years to complete.

Not necessarily. While there may be upfront costs, strategic relocation can lead to long-term cost savings through improved efficiency, reduced transportation costs, and better risk management.

Technology is crucial for maintaining visibility and control during and after relocation. Invest in systems that provide real-time tracking, data analytics, and seamless communication across your new supply chain network.

Diversify your production locations, explore free trade agreements, implement flexible manufacturing capabilities, and stay informed about trade policies. Working with an experienced logistics provider can help you navigate these complexities.

How GEODIS can help

GEODIS is a global leader in supply chain solutions, offering comprehensive services to help you navigate the complexities of supply chain relocation and build resilience. Here's what you can expect when you work with us:

 

  • Strategic consulting to assess relocation options, considering transportation networks, local regulations, and market dynamics
  • Global reach combined with local expertise to help you navigate diverse regulatory environments
  • Cutting-edge technological solutions for real-time visibility and supply chain optimization
  • Customized logistics solutions focused on securing your supply chain and mitigating risks
  • Expertise in tariff risk mitigation through strategic production relocation and free trade agreement optimization
  • Access to a wide network of carriers and partners for flexible, efficient transportation options
  • Scalable services that adapt to your evolving business needs and market changes
  • Integration of freight forwarding, customs brokerage, warehousing, and transportation services for a seamless end-to-end solution

 

Get in touch today to discover how GEODIS can help you build a more resilient, efficient, and adaptable supply chain.

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