Global Supply Chain Readiness Report:

The Pandemic and Beyond

Fortifying the Global Supply Chain

Manufacturing supply chains are in a precarious state.

Disruptions like the COVID-19 pandemic, and now the war in Ukraine, are testing the resiliency of trade networks around the world. Whether it’s port closures, supplier shutdowns or skyrocketing fuel costs, original equipment manufacturers may find themselves recalibrating longstanding strategies, such as offshore outsourcing and just-in-time production.

An IndustryWeek and Jabil survey of 713 manufacturing leaders across seven key industries explored the impact macroeconomic events are having on global supply chains and how manufacturers are responding.

Manufacturers are holding strong amid unprecedented challenges by applying a variety of strategies, including technology investments, supplier diversification and plans to localize their supply chains closer to their customers. Still, responses indicate a need for increasing collaboration and strategic partnerships to prepare for the next disruption.

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Broken Links in the Chain

Survey respondents were initially caught off guard by the pandemic, with many still struggling to secure supplies and deliver on customer expectations.

64% of survey participants say either long order-to-delivery lead times or material shortages had a moderate to significant negative impact on their operations.

More than one-third

of respondents also reported a moderately negative impact related to:

Material price increases

Unplanned supplier disruptions

Travel restrictions

Labor shortages

Picking Up the Pieces

Strong supplier relationships play an integral role in a resilient supply chain. That’s why many respondents indicated they adopted various supplier relationship management strategies, including supplier diversification, renegotiation of agreements and the implementation of supplier scorecards and other evaluation tools.

Supplier Diversification

35% of manufacturers diversified their supply base during the pandemic. Overreliance on a single partner or suppliers from one region has put many manufacturers at high risk.

Supplier Evaluations

34% began reevaluating supplier performance during the pandemic. Scorecards can help manufacturers identify weaknesses in their supply base and collaborate more effectively with their partners.

Renegotiating Agreements

35% of respondents renegotiated supplier agreements during the pandemic. Examples include modifying order commitments (e.g., minimum order volumes), extended payment terms and discounts/rebates.

Bringing it Back Home: Present and Future

Localization efforts, such as reshoring or nearshoring production closer to customers, were less of a priority in the short term for many respondents. But, looking ahead, more manufacturers are considering such transformative moves to protect their supply chain from the next major disruption.

Localization Today

16% of respondents implemented reshoring/nearshoring initiatives prior to the pandemic, and 29% did so after the pandemic. Reshoring involves moving production closer to the point of consumption, often bringing manufacturing back from Asia to either the U.S. or European customer bases. In some cases, manufacturers may choose to nearshore production—that is, moving production to a nearby country, such as Mexico for a U.S. firm, to maintain labor cost advantages.

Localization Tomorrow

Another 26% of respondents plan to reshore/nearshore production in the future, while 29% say they have no plans to do so. While 71% of manufacturers have either reshored/nearshored some aspects of their production or expect to in the future, others may recognize the need to localize production, but the lack of domestic capacity, labor availability or expertise may hinder their efforts.

Localization Today

Localization Tomorrow

Leveraging Supply Chain Technology:
By the Numbers

Among the keys to increasing supply chain transparency and flexibility is the use of technology. Manufacturers are deploying a wide range of digital solutions that free workers from repetitive, manual tasks so they can focus on higher-value activities.

indicate they plan to implement supply chain risk management technologies in the short to medium term.

Operations Optimizations

Employee Productivity

indicate they plan to implement cloud computing in the short to medium term.

plan to implement demand planning/forecasting technology in the short to medium term.

Safety & Security

plan to implement AI/ML in the short to medium term.

Supply Chain Management

Help Wanted: Support Services in Demand

Technology cannot close all the gaps in the manufacturing supply chain. Many respondents indicated the need for third-party services, such as 3PLs, contract manufacturing and technology support to be successful in the future.

Customer Service Support

Supplier Relationship Management

Technology Support

Customer Service Support

Answering customer questions, filling orders, providing quotes and responding to repair, maintenance or warranty issues are challenging during “normal” times. Available workers became even more scarce during the pandemic. Perhaps this is why 38% of respondents indicated that customer service support was “extremely important” for optimizing supply chain resiliency, the top response rate among all answer options.

Customer Service Support

Supplier Relationship Management

Technology Support

Supplier Relationship Management

Another 37% of respondents rated supplier relationship management (SRM) as “extremely important” when mitigating supply chain risk. This is a strategy focused on developing and managing partnerships. Sometimes this requires the implementation of procurement sourcing and negotiation services and technologies that can help manufacturers gain more favorable pricing.

Customer Service Support

Supplier Relationship Management

Technology Support

Technology Support

As more manufacturers digitize their operations, they need outside help to implement, integrate and manage these systems. Not surprisingly, 31% of respondents ranked technology support and consultation as “extremely important.”

Roadblocks Ahead

As manufacturers look to the future, they expect to continue contending with a wide range of supply chain challenges. This includes:

who anticipate more shipment delays.

Operations Optimizations

Employee Productivity

who expect ongoing price volatility.

who anticipate more supplier/component material shortages.

Safety & Security

who agreed that labor shortages had a “significant negative impact” on operations, with economic indicators showing this trend will continue for some time.

Supply Chain Management

The Path to Lasting Resiliency

Weathering the next storm requires a steadfast focus on relationship building, but change doesn’t happen overnight. It takes years to build trust to gain the mutual benefits that manufacturers and their supply chain partners desire.

Experienced global manufacturing solutions providers, such as Jabil, have built these relationships over decades. They have the capacity, global reach and technological capabilities manufacturers need to localize their supply chain. They also have dedicated teams focused on key manufacturing solutions, including supply chain and procurement services, engineering, advanced assembly and materials science.

Additional Resources

Understanding Component Shortages (and How to Survive Them)

In this article, Graham Scott, Jabil’s Vice President of Procurement, shares the underlying causes of component shortages and provides guidance to better navigate future shortages.

Read Article

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