Thanks to COVID-19, moving supply chains is once again a prime topic for discussion

June 9th, 2020
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The COVID-19 crisis challenges well-established principles and pushes companies to rethink their priorities by coming up with new, sustainable solutions. One of the most pressing topics being reassessed is the question of whether to move supply chains. This is one of the main conclusions of the latest study "Tendances et Priorités des Départements Achats 2020 suite au Covid-19" (Trends and priorities of procurement departments in 2020 following COVID-19) carried out by AgileBuyer and the French National Procurement Council (CNA).

A trend towards moving supply chains to France and Europe

Currently, 25% of French companies plan to move part of their supply chain — that's nine percent higher than at the beginning of 2020. For the most part, they will switch to suppliers in France (98% in May 2020 compared to 59% in January 2020) but also to suppliers across Europe (62% in May 2020 compared to 63% in January 2020).

As you would expect, their main aim is to secure supplies. Since the outset of the COVID-19 pandemic, some companies have paid a high price for their heavy dependence on Asia, with production in "the world's factory" interrupted and transportation slowed or halted altogether. For example, in the pharmaceutical industry, 70% to 80% of excipients and active ingredients are manufactured mainly in India and China [1].

Companies expect moving their supply chain to bring other benefits too, notably in terms of corporate social responsibility (environmental and social impact) and time to market.

Adapting to constraints

This is nothing new: Buying Made in France products presents other difficulties, which seem to be growing over the years. Most companies are restricted by the lack of availability of Made in France products. Other drawbacks have also been raised, such as cost and the fact that some foreign customers insist on buying locally.

Olivier Wajnsztok, Managing Director of AgileBuyer, explains: "Some ecosystems, for example that of electronics, are no longer present in France, and procurement managers often say they want to switch to "dual sourcing" — that means distributing production between one French site and one site elsewhere".

Despite still being subject to logistical constraints and the increasing demand from end customers to specify the origin of the products that they consume, the Made in France trend is set to continue.


[1] Sia Partners, 2020

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