The rise of globalization in the 1980s and 1990s did wonders in delivering then-unprecedented cost efficiencies by connecting supply chains worldwide. But with the world still confronting a pandemic, ongoing U.S.-China trade tensions, skyrocketing inflation and the war in Ukraine, is today’s interwoven global supply chain still the most viable option?
Greg Petro, CEO of data-driven product decision making platform First Insight, has long held the belief that the supply chain’s future—like today’s current consumer—may be better off if it doesn’t have all of its eggs in China’s or Asia’s basket. And that means deemphasizing centralized sourcing market in once, while prioritizing production in locales closer to end consumer market.
“In 2006, I wrote a piece that talked about the idea that we need to fragment manufacturing, and go back to the most efficient supply chains, where manufacturing is as close to the demand node as possible,” Petro told attendees Sourcing Journal’s annual Fall Summit on Tuesday. “Ultimately, the gross margin efficiencies that have been gained by going into China are going to evaporate, if they haven’t already.”