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.