Global to local: Strategic shoring and the future of supply chains
Positioning supply chains closer to consumers can help companies mitigate myriad risks. Here’s how to make it happen.
They say all politics are local. Increasingly, the same can be said about supply chains.
As the pandemic demonstrated, traditional supply chain models can be fragile. The weaknesses that emerged left many companies struggling to meet demand and manage risks.
But those supply chain stresses have lingered, buttressed by new risks on multiple fronts. To adjust to these new realities, many companies are shifting toward “strategic shoring”—that is, relocating supply chains closer to the United States and the Americas. In fact, in a recent KPMG survey of 250 US executives, 69 percent say their supply chain will be based in the Americas within the next two years, up 10 percentage points from today.
Strategy shoring offers several benefits, from improved resilience and shorter lead times to protection from tariff changes—all timely topics as the new Trump administration looks for ways to bolster US manufacturing.
How can business leaders leverage the strategic shoring approach to fortify their supply chains? Here are five key considerations, which are part of our new report, “The Proximity Premium.”
69%
Percentage of respondents who plan to base their supply chains in the Americas within the next two years, up 10 percentage points from today.
Consideration #1: The advantages of nearshoring
Mexico and Latin America aren’t just for beach vacations—they’re great destinations for supply chains, too. Among the advantages are a skilled workforce, lower costs, and beneficial trade agreements.
Mexico benefits from the US-Mexico-Canada Agreement (USMCA), which facilitates preferential trade across North America, making it a better choice than traditional offshore locations, such as China. In fact, US imports from Mexico reached historic highs in 2024.
Latin America, meanwhile, boasts valuable natural resources and a strong and established infrastructure—appealing for automotive, agriculture, and tech manufacturing. Colombia and Chile offer easy access to the Panama Canal and abundant copper, which is critical for electronics and battery manufacturing.
Consideration #2: Speed to market
Relocating supply chains closer to the Americas enables companies to reduce lead times, adapt to changes in demand, and enhance operational flexibility.
This is particularly valuable in industries with high-tech manufacturing needs, such as semiconductors and electric vehicles, where supply chain resilience is critical to meeting demand and maintaining competitiveness. For instance, moving operations closer to the US consumer market enables companies to respond more quickly to changes in consumer preferences and market trends.
In addition, companies can implement just-in-time inventory strategies more effectively, reducing the need for large stockpiles and enhancing efficiency across the supply chain.
Consideration #3: Trade, tax, and other complexities
Trade agreements like the USMCA play a crucial role in strategic shoring. However, these agreements come with regulatory complexities and political uncertainty.
Products must meet specific origin requirements to qualify for tariff benefits, for example, a process that becomes intricate when sourcing components from multiple countries. In addition, the new Trump administration has signaled its intention to renegotiate parts of the USMCA.
Tax incentives are another factor. Many Latin American countries offer favorable tax policies for businesses relocating their supply chains.
Beyond taxes and trade policy, relocating supply chains closer to home presents other challenges. Here are three to address up front:
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Consideration #4: Sustainability and carbon footprint
Sustainability has become a top priority for business leaders as stakeholders and consumers increasingly demand environmentally responsible practices. By relocating supply chains closer to the Americas, companies can minimize long-haul transportation and better utilize renewable energy sources.
Latin America is flush with renewable energy options. Two-thirds of its electricity comes from clean sources like hydropower, solar, and wind. This focus on sustainability allows companies to meet their carbon reduction targets more effectively and could provide big tax advantages.
What’s more, the use of sustainable materials and reduced energy consumption can help organizations enhance their environmental, social, and governance profiles, which is increasingly important to investors, regulators, and even consumers.
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Consideration #5: Future-proofing your business
The shift toward strategic shoring reflects a growing recognition among business leaders that proximity is a competitive advantage.
By carefully evaluating regional opportunities and risks, leveraging tax incentives, and prioritizing sustainable practices, companies can build robust, agile supply chains capable of withstanding future disruptions.
In other words, strategic shoring isn’t just a trend. It’s a transformative approach that is reshaping the future of supply chain management. To learn more, check out “The Proximity Premium.”
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