Nearshoring offers interesting possibilities
How can the power of parallel supply chains be harnessed?
Many companies work with a parallel supply chain. They don’t want to be dependent on a single supply chain. After all, the consequences would be incalculable if the supply of products and services comes to a standstill in this single chain. Another important advantage is that the parallel supply chain enhances the adaptive capacity of businesses. It means they are more flexible and better able to respond quickly to changing market conditions. The question is: how and where do you structure the parallel supply chain? Nearshoring could be an interesting option.
The vulnerability of a supply chain was demonstrated once again recently. Every business owner who relies solely on partners in the Far East will have felt bitterly angry when the Ever Given caused a blockage in the Suez Canal. The blockage is gone, but the effects are still palpable. Prices for transport from the Far East have risen sharply. Another fly in the ointment was the coronavirus, without a doubt. No country or continent is immune to its impact. The virus may seem under control for a while, but then flares up again. Government measures such as a lockdown and mandatory quarantine can bring a supply chain to a standstill in an instant.
Parallel supply chain goal 1: ensure delivery continuity
Every company wants to offers its customers delivery continuity. Setting up a parallel supply chain is a way to achieve this goal. As soon as there are issues threatening supply from one (main) supply chain, the capacity in another supply chain can be expanded quickly. This is how delivery problems can be resolved or even prevented in a short time. An additional advantage is that a parallel supply chain keeps the partners in the main supply chain focused. They will realise it is important to be competitive with their terms and conditions, service, and prices. After all, there is another party who can take over the work…
Parallel supply chain goal 2: increase adaptive capacity
Being able to respond quickly to changing market conditions is of vital importance to businesses. This is not always an easy task for internationally operating companies. After all, market conditions can vary greatly from country to country. Large fashion chains are often very well prepared for this. When the Netherlands experiences an unexpected warm spell in autumn, H&M – for example – wastes no time in making sure the shops are stocked with light and floaty tops. These are not brought in from the Far East, but from a parallel supply chain close to the local market (nearshoring) that can scale up capacity quickly.
Structuring a parallel supply chain
It is clear that a parallel supply chain offers clear advantages. Also clear is that setting up, managing and maintaining a parallel supply chain demands a significant investment of time, money, and manpower. This article cannot address when a parallel supply chain is profitable or not for a company. However, it is telling that experts feel every company should have at least a dual-sourcing strategy. They point out that this does not need to lead to a completely structured and active supply chain. If a company has identified and assessed all alternative sources of materials, goods, transport, it already has a realistic plan B in place. Based on this, the company will be able to react quickly, giving it a huge advantage over competitors who are unprepared to face a disaster.
Option: nearshoring in Czech Republic
Where could a Dutch company – active in the Western European market and with a supply chain in the Far East – set up a parallel supply chain? The Czech Republic should be strongly considered. For a start, this reduces the transport time: transport of products and materials from the Czech Republic to the Benelux/Western Europe takes just one day. What’s more, Czech work ethic is a crucial success factor. Czech employees are often excellently educated, very motivated, and work as hard as in the olden days (in the best sense of the word). If they then also have advanced equipment and high-quality materials, the result is perfect: products that are available quickly and meet the very highest quality requirements.
If you would like to know what nearshoring in the Czech Republic could mean to your company, please contact Willian van Eerd, firstname.lastname@example.org.