Multi location sourcing to be the new reality in manufacturing sector?

The short answer to this is Yes.

The pandemic has made businesses rethink their strategies and supply chains world over. While this is true for every industry, the shift is already visible in the manufacturing sector as they are seriously thinking and working towards multi-location sourcing.

Why we think multi-location sourcing will be a new reality in manufacturing?

For years, China has been the global factory for goods, however the pandemic highlighted the world dependence of one source and country, which impacted the business operations world-over. This made businesses rethink their strategies and plans. The pandemic disrupted the status quo. The top factors that are guiding the multi-location strategy are -

Cost effectiveness has lost its sheen

One of the prime reasons for strong global supply chain networks was the price competitiveness – both in terms of production and the supply chain rates. However, in the past few years the cost competitiveness has come down sharply. The production costs have been rising steadily over the past few years and the supply chain costs skyrocketed due to COVID-19 disruptions. The fragile global supply chain will take atleast another year to recover. The price edge that sourcing from a particular location was offering has vanished today and hence it is important for businesses to reconsider their decisions.

Availability is of prime importance

We are living in an unpredictable era. The geo-political situation will continue to impact various aspects of the business and hence availability is of paramount importance for continued business. To take the recent examples – as the world was recovering from the effects of pandemic disruptions, the war in Europe caused major delays in European ports. Smaller disruptions with drivers' strike in Canada, USA, South Korea made the wait time longer. The crises in Sri Lanka too is showing its impact on the supply chains in Asia. The zero Covid policy implemented by China is making the supply out of China increasingly unpredictable. Keeping this in mind, the manufacturing companies are focusing on multi-location sourcing, to ensure continuous production.

Climate change will impact supply-chains

Scientists have predicted that climate related disruptions will intensify across the world. The supply chain infrastructure like ports, highways, rail-lines etc. will be threatened by natural disasters like cloud bursts, typhoons, storms etc. and this will impact businesses directly if they rely on a singular source. Working with multiple sources will distribute the risks and ensure business continuity.

Strategy overhaul – JIT to JIC

The ongoing fluctuations in supply, due to external factors like pandemic, geo-political situations, natural disasters, etc, are making manufacturing businesses rethink their inventory strategy. Businesses that were using Just in Time (JIT) inventory have been moving to Just in Case (JIC) inventory to ensure continued production. However, JIT has its benefits like increased agility, efficient use of resources and reduced costs. Businesses do not want to pass up on these benefits and hence a new hybrid model seems to be emerging where businesses stock up more than what they do in JIT but not as much as they would in JIC, however they source from multiple locations to benefit from the cost and availability factors.

What this means to the supply chain industry?

This means that the supply chain businesses like freight forwarders and logistics companies will have to invest in digitizations, infrastructures and build strong network across the globe.


According to a study in 2020, 39% businesses have implemented a control tower or nerve center approach to increase supply-chain transparency. This percentage will grow higher in the coming years. End to end visualization will help businesses know the status of their cargo and plan better.


As businesses source from multiple locations, there will be greater demand for warehouses, transport vehicles and reliable logistics experts that can manage the whole process with minimum intervention. The logistics company will closely collaborate with manufacturing companies internal supply chain teams to have a greater role in the manufacturing process as they will time the inventory, optimize export timelines and make arrangements for possible alternatives in case of disruptions.

Strong Global Networks

A freight forwarder with strong global network will be an asset to the manufacturing companies. Strong global network would mean reliable sourcing, warehousing and distribution network in various locations around the globe. This would free up the manufacturing business to focus on the core proposition of the business i.e producing world-class products.

These are exciting times for those in supply chain management. This is a time to prove “ When the going get’s tough, the tough gets going.” Logistics companies with strong investments in digitizing, infrastructure and global networks will succeed.