Executives are most concerned about rising costs and complexity of supply chains

Greater complexity and cost of supply chains pose strategic challenges for MNCs

Global supply chain restructuring is likely to contribute to elevated inflation over the medium to long term. Companies will also need to evaluate whether and how these higher costs can be passed on to end-customers through price increases. Finally, competitive dynamics may also shift depending on how players structure their supply chains going forward, the level of risk mitigation they want to do, and how much automation they are able to drive.


  • In FrontierView’s global benchmarking survey on supply chain restructuring (n=67), a significant proportion of companies indicated that they are looking to regionalize supply chains to get closer to customers, improve risk mitigation, create more flexibility in supply chains, and respond to pressures from governments for manufacturing localization.
  • While this dynamic will create opportunities for some markets—Vietnam, Mexico, and India are at the top of the list for many companies, in addition to their home markets—overall more redundancies, less streamlined supply chains, and localization in markets with higher labor costs (especially the US and Europe) are likely to drive up input costs.
  • Reflecting this, 68% of companies we polled said more expensive supply chains are a key concern about the evolution of their supply chains in the next five years.

Our View

Combined with tight labor markets, greater regulatory scrutiny, duplication of supply chains for industries with national-security sensitivity (semiconductors), the investments firms are making into supply chain restructuring are inflationary and will contribute to higher costs of goods for consumers and businesses over the long term. Automation may offset some of that, but likely only partially. This trend is unfolding at the customer-supplier level too, with companies requiring their suppliers to also de-risk and diversify their supply chain footprints. This indicates there will be opportunities to consider the competitive advantages of different supply chain structures, from better access to public sector customers, to cost advantages and supply chain resilience as an important element of differentiation.

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