Sourcing materials has always been a pressure point within US supply chains, and the resulting stress for companies to source their materials was further exacerbated by the COVID-19 pandemic. Many companies have found themselves with lean storage facilities and no flexibility due to an over-reliance on just-in-time inventory management processes and are now struggling to have enough materials to manage day-to-day operations.
One company I spoke with recently had to shut down for two days due to lack of steel in storage. The need for building flexibility extends into carrier solutions as well, resulting in greater risk without a diversified carrier network.
Sourcing from overseas countries like China lengthens the supply chain when the goal should be to shorten it. According to a February 2020 Gartner survey, 33 percent of global supply chain leaders had moved or were looking to move their operations out of China by 2023.
Shippers are seeing the downsides to China sourcing play out right now with the backups at the West Coast ports. Despite the ports’ moving toward 24/7 operations, it will be a lengthy process to get those ships into port, unload the cargo, and get it where it needs to go.
This is where sourcing in Mexico could provide a solution, shortening supply chains, cutting forecasting times, and providing a greater number of transport methods due to its proximity to the US. The cash-to-cash cycle would be cut drastically, and goods or services would be available to the market in one-third the time it takes to source from overseas.