SMEs move supply chains closer to home market to minimize supply chain disruption
US small- and medium-sized enterprises (SMEs) are moving their supply chains closer to their home market at a faster rate than predicted to help minimise supply chain disruption.
A survey from Gartner-owned consultant Capterra shows that 88% of the 300 SMEs surveyed plan or are currently in the process of switching at least some of their suppliers closer to the US in 2023.
Capterra said the move comes as businesses are faced with “economic headwinds, operational bottlenecks, and an ongoing need to remain competitive”.
“While industry experts predicted nearshoring to happen slowly over the course of several years, [SMEs] have already or are making a rapid shift to nearby suppliers,” the company said.
It added: “Small and midsize businesses are taking drastic action to optimise and innovate their supply chains.”
The survey also found that those surveyed rate economic inflation, lack of inventory and the economic recession among their top three concerns for the year.
“[SMEs] are disproportionately impacted by these challenges compared to larger companies with more resources to absorb rising costs and who have more buying power in the procurement process,” Capterra explained.
This reflects reports from last year claiming that larger retailers had built up higher levels of inventory than their smaller competitors.
However, the Capterra report also suggested that smaller firms may also be better at managing inventory levels than larger companies.
The survey showed that, while major retailers have been dealing with an influx of excess inventory, 67% of SMEs say their forecasting techniques have helped them avoid this same fate.
“Both seasonal and quantitative forecasting techniques are among the most commonly used by [SME] supply chain professionals in 2022 and going into 2023,” the reports stated.
Also, companies are also increasingly working directly with each other to place larger orders or with their supplier who then has greater purchasing power, the research found.
The number of SMEs in a group purchasing organization (GPO) has more than doubled in just the last year, Capterra said.
“The biggest surprise in the research is that nearshoring is happening much faster than predicted at small businesses,” said Olivia Montgomery, associate principal supply chain analyst at Capterra.
“What’s less surprising, but equally critical, is the shift we’re seeing toward collaborative procurement. Supply chains are becoming less of a back-of-the-house ‘secret recipe’ and more like a joint collective where everyone benefits.”