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More business turning to regional suppliers and nearshoring, finds Accenture

Companies are turning to regional suppliers and production facilities to become less vulnerable to disruption, according to the recently published “Resiliency in the making” report by management consultants Accenture.

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The research is based on a survey conducted between January and March 2023 that involved 1,230 senior executives across engineering, production, supply chain and operations.

The respondents spanned multiple continents, coming from Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Spain, Sweden, the United Kingdom and the United States.

According to the report, by 2026, 65% of companies intend to buy most key items from regional suppliers, up from 38% today. Even more organizations (85%) say they plan to produce and sell most of their products in the same region by 2026, almost doubling from 43% today.

The report also finds that regional sourcing and production are important to becoming less vulnerable to disruption, but not enough to reach sustained resiliency.

Accenture claims that companies must also increase their digital maturity by investing in data, AI, and solutions like digital twins.

“Having more mature capabilities in these areas helps companies build reconfigurable supply chains and autonomous production. These capabilities also enable dynamic, sustainable product development and support decentralized, real-time decision-making at the frontlines of operations,” says the management consultancy company.

Accenture states that on average, companies are investing $1 billion in 2023 to digitize, automate and relocate supply and production facilities, which is expected to increase to at least $2.5 billion in 2026.

Sunita Suryanarayan, global supply chain and operations resiliency lead at Accenture, says companies will have to go about strategically redesigning supply networks to get the resilience they are looking for:

“When disruption struck, many companies quickly applied short-term fixes to their complex global production and supply networks. These networks had been designed for cost efficiency and just-in-time deliveries. Now is the time to strategically redesign them for multi-sourcing, without creating unwieldy silos or new bottlenecks, and make them more transparent and agile with data and AI to drive sustained resiliency.”

As part of the research, Accenture says it developed a model to measure engineering, supply, production and operations resiliency on a 0-100 scale. On average, companies achieved a score of only 56.

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