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UT report: The future belongs to regional supply chains
Remember the "rush to Asia" that occurred in the late 1990s and early 2000s, as many companies in North America and Europe moved their manufacturing and/or sourcing operations to countries such as China, India, and Vietnam in pursuit of low manufacturing costs? A new report from the Global Supply Chain Institute at the University of Tennessee (UT) argues that many of those decisions were made in haste and failed to take a "total cost of ownership" approach that considered the greater challenges and risks inherent in managing a global supply chain.
In their "Global Supply Chains" report, Ted Stank, Mike Burnette, and Paul Dittmann predict a return to localized supply chains for many products. "Our research suggests that global supply chains across the world will eventually break into a series of demand and supply pods where regional procurement and manufacturing operations will supply the major demand centers of the area," they write.
The paper goes on to present a framework for assessing different locations for global supply chain operations, including sourcing, manufacturing, and distribution, and outlines other best practices. The report can be downloaded here.
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