KPMG Study: Proximity Emerges as the New Value Driver for U.S. Supply Chains

Jean-Pierre Trouillot, Partner, Deal Advisory, KPMG U.S., and Latin America Regional Advisory Leader, KPMG Americas*: “Business executives are re-evaluating their supply chain assumptions with a primary focus on regional and domestic sourcing and distribution to mitigate geopolitical and economic uncertainty. Companies are seeing strategic shoring as a way to improve supply resilience and operational agility, offering them the benefits of proximity, cost efficiency and access to resources.”

• 76% of survey respondents are prioritizing immediate strategic shoring actions.
• The Americas’ share of supply chains to the U.S. is expected to rise by 16%, while the average number of locations in a single supply chain is being consolidated for efficiency measures, falling from 2.7 to 2.4 locations over the next three years.

Mary Rollman, Principal, Supply Chain Leader, Advisory Practice, KPMG U.S.: “It is important for companies to challenge and reassess the factors and assumptions driving supply chain decisions to strike the right balance between cost efficiency, supply chain flexibility and sustainability.”

• 73% of executives say their company has increased their supply chain’s cost efficiency via strategic shoring, enhancing their operational and financial performance.
• While still the primary goal in supply chain strategies, cost as an outcome has declined in importance over the past two years by 4 percentage points. In contrast, less tangible ambitions such as speed, flexibility and sustainability have gained importance by two, three, and two percentage points, respectively.
• 61% of executives say strategic shoring will help reduce the carbon footprint attached to products, positively impacting their sustainability efforts.

Doug Zuvich, Tax Partner, KPMG U.S., and Latin America Regional Managing Partner, Tax and Legal*, KPMG Americas: “Companies don’t always consider tax as part of their overall strategic supply chain cost assessment. This could be a big miss. A tax-first mindset, combined with a data-driven, connected thinking approach, can aid business executives to better understand how different factors interact and impact supply chain decisions.”

• Executives report that the current tax environment (23%) and regulatory policies (31%) are among the top five challenges to achieve certain strategic shoring initiatives.
• 53% of executives say that regulators and tax officials are significant influences on their strategic shoring decisions — second only to shareholders, at 56%.
• 43% of executives identify data and analytics capabilities as most important to advancing sourcing 

Meagan Schoenberger, Senior Economist, KPMG U.S.: “Any disruption in the supply chain bears the risk of increased inflation and consequently a potential rise in interest rates. That can impact everyone.”

• 55% of executives view resilience and faster time to market as the dominant objectives pushing their companies to nearshore.
• A majority (75%) of executives say their company has successfully used strategic shoring to strengthen its supply chain resilience.