Watch: ‘The Proximity Premium’: Can Nearshoring ‘Shockproof’ U.S. Supply Chains?

Jean-Pierre Trouillot, regional advisory leader with KPMG Americas, and Mary Rollman, principal and supply chain leader in the Advisory Practice of KPMG US, discuss the findings of the firm’s new survey of the changing sourcing strategies of U.S.-based supply chain executives.

KPMG’s survey, “The Proximity Premium: Strategically Reshaping Supply Chains in the Americas,” polled business executives about their efforts to boost supply chain efficiency and resilience by moving manufacturing closer to end markets — in this case, away from China and other parts of Asia to the U.S., Mexico, Central and South America, and the Caribbean.

Trouillot says the report found U.S. business today keenly aware of “the vulnerabilities associated with globalized and long supply chains.” The emergence of geopolitical tensions and other uncertainties is driving them to “rethink and reshape the supply chain landscape at large.” Factors under consideration include market access, talent, natural resources and tax and regulatory incentives.

Rollman says the survey discovered that “a lot of those assumptions have changed in terms of cost. It found there is a value to proximity.”

The trend toward nearshoring of U.S. supply chains has been extensively reported in recent years. Still, Rollman is surprised by the number of executives who said they were reevaluating their global supply chains — fully 80% of those surveyed. And more than 60% said they want to make a move within the next two years.

The cost of labor remains a concern, but alongside it, executives are prioritizing the need to make their supply chains more resilient and lessen the risk of disruption caused by lengthy distances between the manufacturing plant and end market. They still remember the problems they encountered during the COVID-19 pandemic, when supplies of critical materials and products were abruptly cut off.

“Resilience and speed to market are dominant objectives pushing them to draw their supply chains closer to the Americas,” Trouillot says. “It’s top of mind for U.S. executives.”