Clarkston Consulting Partner, Bruce Twery, Featured on SAP Insights
Durham, NC | January 5, 2021
Partner at Clarkston Consulting, Bruce Twery quoted on supply chain resilience. An excerpt from the article is included below:
Pandemics aren’t the only threat to global supply chains. To survive disruption, companies need to include suppliers that are close to their customers.
Though having some local supply chains is an attractive benefit, it doesn’t always make sense. When making sourcing decisions, companies will still need to consider factors such as cost, manufacturing capacity, and availability of raw materials.
The most obvious drawback to localization is its cost: where local labor costs can be high, consumers may ultimately feel the pinch in their pocketbooks. Cost savings from transportation might balance higher labor costs, but it’s industry- and product-specific, Bateman says.
“It’s a balancing act. It won’t ever be perfectly equal in that you’re saving on logistics to offset higher labor costs,” she says. “That’s not to say that shipping is an insubstantial cost, but it’s not on the scale of really high-cost labor, which is why many global supply chains were outsourced to begin with.”
The investment required to establish local sources of supply can be substantial, too, adds Bruce Twery, partner at Clarkston Consulting. “Moving a plant or building a new plant can be hundreds of millions of dollars,” he says. “[Companies] need to look at those investments through the lens of their specific products, their markets, and their strategy for winning in that market.”
Read the full article highlighting supply chain resilience here.