Redesigning your global supply chain? Be smart about it

According to supply chain consultant Mark Baxa, many global supply chains are currently in the process of “rebalancing,” as companies shift away from having an overly heavy manufacturing and sourcing footprint in China. As they make these shifts, however, Baxa urged supply chain leaders to be smart and consider the full impact of such moves.

Baxa made this point during a presentation at the Council of Supply Chain Management Professionals (CSCMP) EDGE 2020 conference on “Smarter Global Supply Chain Operations.” Baxa and his co-presenter Lee Beard, senior director of global transportation for Nike Inc., made the following suggestions for companies considering changing their sourcing strategy:

1. Look upstream. Some manufacturers have moved their own facilities out of China or have diversified their sourcing strategy to include suppliers outside of China. However, to make sure that you have truly diversified your risk, you need to understand your supplier’s supply chain. In some cases, you may find that those suppliers outside China are still dependent on suppliers inside the country. “You need to look beyond what is obvious,” said Beard.
2. Do not abandon your focus on sustainability. As companies rush to diversify their supply base, they need to make sure that they continue their commitment to sustainability, corporate social responsibility, and ethics. It’s important to work with suppliers that comply with your company’s ethical and environmental standards and those of your customers. Consumers will hold you accountable not just for the product that you supplied to them but how you supplied it, said Beard.
3. Don’t forget about infrastructure. It’s not enough to find a supplier who provide what you need, you also need to make sure that you can get it to market. Make sure the new country that you source from has a reliable supply chain infrastructure.
4. Invest in developing in-house expertise in global trade. While it’s beneficial to work with outside experts such as custom brokers, you can’t completely outsource your responsibility to comply with trade rules and regulations.