Eight Insights on Building Resilience in Manufacturing Supply Chains

supply chain

The following article first appeared in the Insights section of CLA’s website. It is reposted here with permission.

We used to talk about tariffs as the most traumatic event we’ve ever experienced in manufacturing.

Now we don’t even think about them anymore as challenges just keep coming. One analyst noted we should plan for a new challenge every 90 days.

In just a few months, supply chain management escalated to the board room as a top risk management issue in manufacturing thanks to volatile freight costs, long transit times, geopolitical concerns—all of which were frustrated by a lack of access to factories.

The narrative has shifted from building economies of scale to fine tuning economies of resilience.

In May 2023 in Milwaukee, over 100 manufacturing executives gathered to discuss how their enterprise footprint is evolving to handle a very different global landscape.

In a program titled Strategic Investments in Geographies During Times of Rapid Change, CLA moderated a panel of four C-suite executives spanning diverse manufacturing sectors from consumer products to industrial supply.

Here is a summary of their top eight observations on building resilience in supply chains and serving customers.

Developing Markets

The pros and cons of doing business in several developing markets were discussed. The two biggest issues included a lack of vertical integration and lack of infrastructure.

While Mexico has come a long way, it still lacks the robust supplier networks seen in China.

Injection molding, stamping, and circuit boards can be found in Mexico. But other sub-assemblies, like lighting, will still have to be imported from China.

The two biggest issues with developing markets include a lack of vertical integration and lack of infrastructure.

The playbook is similar in other developing supply markets like Southeast Asia, Brazil, and India.

While it is difficult to do business in India for most Western companies, it is particularly difficult for mid-market manufacturers who don’t have size or scale.

There is a tipping point, however, when suppliers won’t be able to ignore India given the size of the market (having recently surpassed China in population).

For now, the value proposition is low due to vertical integration challenges and spotty infrastructure.

Chinese Foreign Direct Investment

Because changing suppliers is a tedious process, it’s worth asking your current supplier if they are making moves to other geographies.

Many Chinese manufacturers, for example, started investing heavily in manufacturing across Southeast Asia, South America, Eastern Europe, and Mexico when tariffs hit.

Staying with the supplier you know may be an easier approach in the short term even if the long-term play is to find non-Chinese companies

Customer Proximity

Large original equipment manufacturers want to understand how to protect major manufacturing investments.

For decades, large OEMs have driven supply chain design. Recently, the frequency of discussion on this topic has shifted from periodic to daily.

OEMs aren’t necessarily dictating where they want you to be, but their top goal has not changed. Continuity of supply is job one, unless there is requirement for a percentage of local content to avoid tariff.

Suppliers are also getting more creative about what a “location” looks like. The bias of ownership is giving way to other approaches.

Continuity of supply is job one, unless there is requirement for a percentage of local content to avoid tariff.

For example, suppliers are more open to a co-location approach and collaborating with five or six partners, or using third-party logistics in cases where a customer needs a few pallets within an hour. Distribution is becoming more distributed.

One executive said being close to port and served markets is one of the top ways to save time and improve cash flow with better lead time.

Chicago was identified as a less desirable destination because anyone who tried to get a container out of Chicago in the last couple years ran into problems

For serving the largest customers, fully redundant facilities are used. Cloned facilities are standardized with disciplined processes, procedures, and policies across all parts of the supply chain.

This approach allows you to be nimble and move orders quickly.

In Market for Market

Given the size of Asia’s economy (India and China’s in particular), it’s a huge opportunity that will only continue to grow.

De-risking may involve staying in Asia because the market is just too big to ignore.

De-risking is not just about manufacturing, but also localized product portfolios, workforce, market access, network design, stocking/service, and local relationships that make a difference how companies structure their businesses and improve resiliency moving forward.

If Asia is exclusively a supply-side play for your company, then exiting may make sense.

If, however, Asia offers demand side opportunities, then localizing is a customer service-driven conversation related to growth objectives.


For years, companies have focused on the S and G of environmental, social, and governnance practices by providing documentation about workplace, safety, and labor practices of suppliers to customers requiring it.

Recently, interest is ramping in the E of ESG.

For example, one executive noted he had never had a conversation with a Chinese factory about raw material sustainability. When he arrived in Brazil, sustainability was question one.

Another executive said transportation is a huge opportunity to reduce carbon footprint. If manufacturing and distribution networks can be designed to reduce distances, it will play a key role in reducing carbon emissions.

If manufacturing and distribution networks can be designed to reduce distances, it will play a key role in reducing carbon emissions.

Among the challenges the market is dealing with is the variety of reporting bodies. There’s a real opportunity for software and guidance to help with collection and reporting of metrics in a harmonized way.

Today it’s the wild west. While there are organizations that can pull data together to show traceability through a supply chain, one of the big challenges is customers are asking for different data and scorecards—and suppliers are measured based on that.

With each customer asking for something different, the administrative costs and complexities are currently high.

In this era of uncertainty, executives noted there’s an opportunity to lead. There’s a short window where suppliers can use their perceived sophistication in ESG to drive value in their business and as a selling point to customers.

Once buyers standardize on scorecards, suppliers are benchmarked like a commodity index where everybody’s the same.

Border Delays

Companies are experiencing a huge uptick in containers stopped at the border in the past six-12 months from all countries—and not just where country of origin is in Asia.

As a result, some of the same traceability expectations with ESG are also being required from a compliance perspective by the U.S. government.

The risks are notably higher in cases where the spot market is used (and less documentation is available).

Digital Passports

As supply chains are strategically relocated on a global basis, traceability will continue to be a major challenge for gaining government approvals.

More import and export compliance resources to manage supplier approvals are also needed to avoid delays at borders.

Another angle to monitor is sanctions.

One executive noted that in his professional lifetime, he’s never seen this level of sanctions.

More countries than ever have them in place, requiring continuous monitoring of complex supply chains to prevent delays of incoming goods at borders.

Automation Critical

With labor scarce, digital strategy has been critical to operations and especially for reshoring programs with new capacity.

Automation is helping manufacturers scale up to deliver quality and standardization when serving customers large and small, as well as improving the quality and timeliness of decisions.

Systems are being used to evaluate tradeoffs in market pricing, costing, capacity, and product shelf life.

Running the business with data that is 30 days old is no longer an option.

Running the business with data that is 30 days old is no longer an option.

A company’s geographic footprint, whether owned or contracted, is rapidly evolving to meet the needs of an unpredictable landscape.

While 20 years ago the narrative was driven by low-cost labor and access to low-cost materials, today the conversation has expanded to include new compliance requirements, like those related to the E of ESG.

In this new era, tracking and traceability are critical to meet new customer requirements, prevent friction cross-border, and fine-tune economies of resiliency.

About the author: Jennifer Clement is an executive sales and marketing leader with CLA specializing in value creation for the C-suite.


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