Capgemini: the nearshoring phenomenon is consolidated with the supply chain in crisis

Nearly 8 in 10 organizations (79%) are diversifying their supplier network and 71% are actively investing in regionalization and in the location. For example, 83% of organizations are investing in friend-shoringa growing business practice in which the network of supply chain focuses on countries considered political and economic allies, in order to further reduce risk exposure.

This is what emerges from the latest report Capgemini Research Institute“Illuminating the path: Building resilient and efficient supply chains in the consumer products and retail industry,” which examines how the Cpr organizations (Consumer product and retail) are transforming theirs supply chain strategy to ensure resilience, efficiency and sustainability for their business.

According to the report, the global supply chains are currently threatened by a multitude of factors, including inflation, geopolitical tensions, excessive dependence on certain countries to supply components, fluctuating freight rates and port congestion. For example, more than three-quarters (77%) of CPR organizations stated that geopolitical tensions have an impact on the costs and efficiency of their supply chains. In light of this scenario, the report found that the nearshoring and sourcing nationwide they are taking on an increasingly significant role as organizations seek to find a balance between cost and resilience.

By 2025 it is expected that the offshore purchases will decline by 7% globally, while nearshoring and domestic sourcing will increase by 4% and 3% respectively. North America is leading this trend, with a projected 9% increase in nearshore purchases, a 4% increase in domestic purchases and a 15% reduction in offshore purchases by 2025.

“Supply chain disruptions have become a common experience for CPG companies in recent years, causing product shortages, delivery delays and increased costs. To meet these challenges and generate profitable growth, it will be essential to balance cost efficiency and resilience by diversifying and adopting sustainable and circular economy practices. Being able to optimize inventories, localize supply networks and explore alternative sourcing options helps meet consumer expectations and manage peak demand,” he said Gerardo CicconeCprd & Euc director of Capgemini in Italy.

The problem of stocks will be central during the Christmas holidays for Cpr organizations. Among the main critical issues reported for the 2023 holidays, 42% cite stock outs or product shortages, 38% cite import-related delivery delays and 35% cite insufficient labor. For this reason, improving supply chain efficiency is among the priorities for the next 12-18 months. However, to achieve this, the vast majority (82%) of companies believe their supply chain will need to undergo significant change, and nearly nine in ten (86%) say data and technology will play a key role in delivering this transformation . Among the technologies adopted, implemented and scaled up, the data management (56%), the cloud computing (55%) andautomation (52%) are the most cited for achieving cost savings and increasing revenue.

There sustainability continues to be an important aspect, although large-scale adoption is still insufficient. Three-quarters (75%) of CPR organizations surveyed said they were actively working to be more sustainable. Likewise, nearly nine in ten (86%) recognize that ethical and responsible sourcing, transportation and manufacturing are critical to gaining a competitive advantage, a percentage that was just 69% in a previous survey conducted in 2020.

However, less than half of companies have implemented and scaled sustainability initiatives: only 49% have done so for responsible sourcing, 45% for a circular approach to production and 45% for packaging recycling . While this is an improvement over 2020 levels, the report shows that the average share of revenue dedicated to sustainability investments has decreased slightly.