Data-led decisions power strategic shoring
Data and analytics capabilities are critical for supply chain executives seeking strategic shoring.
Cultivating a data-centric culture is essential for supply chain executives aiming to fully leverage the benefits of data-driven strategic shoring.
The culture calls for treating data as a vital asset and empowering employees to base their decisions on insights drawn from data analysis. Furthermore, effectively managing partner relationships entails a shared benefits model grounded in a comprehensive understanding of capabilities, achievable only through data and analytics. It is equally important to prioritize the quality of data over quantity. By concentrating on the most pertinent and actionable insights, organizations can avoid being overwhelmed by data and make more informed strategic decisions.
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The fusion of data-driven insights and strategic shoring decisions not only elevates resilience but also paves the way for unparalleled levels of innovation and efficiency. Embracing this data-centric approach equips the supply chain to meet the challenges of tomorrow and thrive in the face of challenges, resulting in agility that sets the foundation for sustainable, long-term growth.
The KPMG survey of 250 US executives with strategic shoring expertise underscores the critical role of data and analytics in driving supply chain excellence.
Data and analytics capabilities are a crucial factor in enhancing sourcing strategies.
43%
prioritize data and analytics as most important to better sourcing.
63%
of high performing supply chains prioritize data and analytics as most important to better sourcing.
Source: “Building Agile Supply Chains Through Data-led Decisions”, PDF, October, 2024
The potential from strategic shoring
New supply chain research from KPMG unpacks the growing “strategic shoring” trend in the Americas, which is defined as the shift in a supply chain’s geographic footprint to encompass more regions and countries closer to the US, such as Latin America and Canada.
Strategic sourcing in North and South America
A handful of countries in the Americas are emerging as key hubs for strategic shoring:
- Top locations: Canada and Brazil
- Largest share: United States
- Runner-up: Mexico
South of the border appeal
Mexico offers manufacturing capabilities and competitive labor costs to favorable United States-Mexico-Canada Agreement (USMCA) trade terms. These reasons will help Mexico grow as a supply chain hub.
Latin America also looks pretty attractive. Natural resources, developed hydropower, wind, solar, and other types of renewable and clean energy sources could provide a big tax advantage for organizations.
For supply chains considering nearshoring, companies should evaluate factors like resource access, sustainability, and tax environments. Before making any decision, leverage data and analytics to better determine short and long-term costs and benefits.
64 percent of supply chain executives surveyed consider indirect taxes, government grants and incentives, and transfer pricing rules at the outset of their strategic shoring decisions. Leveraging data and analytics to evaluate these factors, along with other critical considerations such as labor costs, transportation networks, and market demand, enables supply chain leaders to develop a comprehensive view of the strategic shoring scene and make data-driven decisions that optimize supply chain performance.
In the high-stakes arena of global supply chain management, strategic shoring has become a vital tactic for gaining a competitive edge. By relocating operations closer to end markets, companies can cut lead times, boost responsiveness, and reduce risks. Informed decisions on strategic shoring depend heavily on data and analytics.
Analyzed data leads to clear decisions
Analytics provide supply chains with valuable insights from data, aiding in better decision-making. Tools such as AI algorithms, predictive analytics, and digital twins play a crucial role in identifying opportunities, enhancing processes, solving problems, and improving outcomes. For example, AI can improve efficiency by optimizing routes, digital twins can test various scenarios to identify potential issues, and predictive analytics can forecast future demand and inventory needs, enabling proactive planning.
Additionally, incorporating sustainability data into strategic shoring analyses allows supply chain leaders to identify opportunities to improve operational efficiency and minimize environmental impact simultaneously.
Data and analytics also enable continuous monitoring and adjustment of strategic shoring strategies in response to changing market conditions and geopolitical risks.
With so many inputs available, it's crucial to identify where data is genuinely improving decision-making and then aim to use the fewest data points necessary
Chris Callieri
Chief Supply Chain Officer at Victoria's Secret
Overcoming challenges
Implementing data-driven strategies for strategic shoring brings its own set of challenges. The KPMG survey identifies several key obstacles, including regulatory hurdles in utilizing free trade agreements and government incentives, actual labor costs, true production expenses, lack of local expertise and talent, cybersecurity incidents, and risks of fraud or intellectual property loss, among others.
To overcome these challenges, supply chain leaders should focus on enhancing the quality of their data and analytics techniques. Activities such as effective planning, building a trusted supplier network, and utilizing analytics enable data-driven supply chain decisions. Strengthening relationships with key suppliers and using metrics and data for collaboration are also important. By evaluating suppliers, including beyond Tier 1, companies can better understand their supply chain network's strengths and weaknesses.
For the successful implementation of data-driven strategies in strategic shoring, organizations should prioritize the following:
- Conduct routine audit exercises to improve data integrity.
- Maintain a clear map of various sources feeding information into the supply chain's data ecosystem.
- Prioritize data quality and perform regular data audits.
By addressing these areas, companies can effectively steer the challenges associated with strategic shoring initiatives.
Enhancing the quality of your data and analytics techniques is going to drastically increase the probability that you're setting your supply chain structure right.
Brian Higgins
US Consulting Leader, Industrial Manufacturing at KPMG US
Proximity Premium: How strategic shoring is transforming supply chains
Companies that embrace strategic shoring, a trend where companies are relocating their supply chains closer to the Americas, are better able to respond swiftly to changes and protect their operations from global volatility - securing a competitive advantage. As global dynamics continue to shift, it's the companies that transform their supply chains that will succeed.
Take a deeper dive into our supply chain insights
What sets apart good from great supply chain leaders? It's their ability to identify not only broad but also deeper opportunities for enhanced visibility and better decision-making.
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How KPMG Supply Chain Services can help
Strategic shoring is a major decision that requires careful planning, detailed analysis, and leveraging technology like AI, machine learning, and digital twins. Rely on KPMG Supply Chain Services for your strategic shoring move. Our proximity planning solutions are tailored to your needs, from supplier selection to tax guidance on prospective locations. Together, we can make the difference wherever you relocate your supply chain operations.
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