KPMG Study – Proximity Emerges as a Value Driver in U.S. Supply Chains

Adopt regional proximity now to cut disruptions and shorten lead times. They view proximity as a value driver: the KPMG study finds that a deliberate focus on regional sourcing and logistics reduces exposure to cross-border chokepoints and volatile freight costs. In practice, many organizations report 15–25% faster response to demand shifts when they meet capacity locally and diversify suppliers by geography, meeting the needed capacity at key moments. The approach strengthens governance by aligning procurement, manufacturing, and distribution teams around shared metrics.

Across years of data, disruptions prove costly when политика pulls resources in different directions. They need a clear, transparent plan that the organization can follow, and the chair of the board should oversee investments in regional capacities. The approach should include политика that aligns between suppliers, manufacturers, and customers, with annual milestones and public reporting on risk and performance. This clarity avoids ad hoc shifts and builds stakeholder confidence.

Best practice is to map regional capabilities and stock nodes, ensuring services near demand centers. They should align with the organization’s annual risk profile and scenario planning. For each node, measure performance using metrics such as supply readiness, on-time delivery, and inventory turns. This data-driven approach reduces ambiguity and makes gains tangible to stakeholders in worldwide operations, even within complex networks.

To ensure execution, they need a disciplined, structured approach. The organization should appoint a dedicated owner in the supply chain function and empower a chair who revises the regional policy annually and reports to the executive committee. The annual plan should specify targeted improvements in certain regions and quantify the impact on performance across manufacturing, distribution, and services. More importantly, leaders must align incentives to sustain proximity gains across the organization.

They also should meet disruptions with standardized playbooks, cross-functional governance, and ongoing monitoring. They view proximity as a core capability that can deliver faster response times and more reliable service for customers nationwide. In practice, the study highlights how they mended gaps between suppliers and carriers, reducing lead times and improving service levels by double-digit margins in key corridors.

KPMG Study Insights: Proximity as a Value Driver in U.S. Supply Chains

Focus on regional, US-serving supply networks to shorten the distance between suppliers and customers. Establish two near-shore hubs in the Midwest and Southeast and target a 25% reduction in average supplier miles and a 10% drop in annual logistics costs, using partnerships to support this shift through strengthened data sharing and joint planning.

Published in june, the study surveyed 320 respondents across farm and non-farm sectors. What they report: proximity is a key driver for resilience and supply chain efficiency. 62% view proximity as the primary driver for continuity; 54% see a 5–12% reduction in inventory levels when location is prioritized; 37% expect annual savings of 4–9% in transport costs. Respondents indicate that proximity influences where to locate operations and how to redesign networks.

Where to start: first map the network between key suppliers and us-serving plants to identify bottlenecks and determine where capacity should move. This view favors a practical, data-driven approach over gut feel.

Strategies emphasize partnerships and visibility: form partnerships with suppliers within a 250-mile radius; coordinate with carriers to compress lead times; deploy shared inventories; align forecasting and production plans to respond through volatility in demand and supply chains.

latin markets warrant attention as a diversification layer. latin and Latin-American suppliers can provide alternative lead times and cost structures that complement us-serving sites, helping to reduce exposure to port delays and weather disruptions while maintaining proximity advantages.

Respondents’ view is clear: rethink strategies and embed proximity into monthly operations planning. The june findings show progress and room to improve, via us-serving partnerships and closer supplier relationships. The контента highlights concrete steps, from mapping between suppliers to piloting proximity initiatives and measuring results, чтобы teams stay aligned.

Thus proximity as a value driver supports resilience and cost efficiency by linking data to on-the-floor actions. By revisiting supply strategies and coordinating with regional partners, companies can reduce risk and improve service in a vuca environment.

Nearshoring to cut cycle times and boost replenishment speed

Recommendation: Shift the most high-velocity replenishment to nearshore locations within a tight corridor from U.S. demand centers to cut cycle times by 20–30% and accelerate replenishment by 25–40%.

Map demand by region, select 3–5 nearshore locations with strong logistics infrastructure, and assign dedicated teams to own the replenishment cycle. Prioritize the most critical suppliers with reliable transportation, short lead times, and robust on-shelf availability. Ensure shipped goods from these locations reach key distribution centers within 24–48 hours.

To minimize risks, a firm needs a clear leader, with a chair to coordinate between procurement, manufacturing, and logistics. Training provided by the firm supports local teams; use dual sourcing for critical components and maintain a lean yet responsive inventory strategy. A defined career path for local staff ensures continuity and faster issue resolution.

Partnerships and governance: Build a number of partnerships with 3–5 nearshore suppliers and logistics providers, with joint KPIs, shared data feeds, and monthly reviews. Through transparent contracts, set service levels for inventory in transit, order fill rate, and cycle-time targets. A central leader oversees procurement, logistics, and store operations, aligning between locations and worldwide markets.

Technology and execution: Deploy real-time inventory visibility, integrated ERP, and collaborative planning tools to track inventory, in-transit goods, and capacity. Use a single view to optimize between locations, reduce handling, and minimize days of inventory on hand. Maintain the capabilities to ship from multiple sites and keep contingency options ready in December planning cycles.

Engage with suppliers and partners via digital channels, including facebook, to share performance dashboards and build trust. This approach expands the number of available partners and strengthens resilience for worldwide supply chains.

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Quantifying total landed costs when proximity changes supplier choices

Target a 12-week pilot to compare total landed costs (TLC) across proximity tiers and reallocate a meaningful share of spend to near suppliers when TLC proves lower, while preserving service levels.

Key TLC components to capture every time you compare suppliers: item cost, inbound freight, duties and taxes, insurance, handling, cross-docking, and inventory carrying costs. Include stockout risk and expediting costs if lead times diverge, and account for currency fluctuations through a regular hedging or exposure plan. Focus on the full cash impact over a meaningful horizon, not just unit price.

Illustrative example (annual demand of 1,000,000 units) shows how proximity shifts TLC. Near supplier: per-unit TLC 11.95; annual TLC 11,950,000. Far supplier: per-unit TLC 13.30; annual TLC 13,300,000. The proximity delta of 1.35 per unit yields a total potential saving of 1,350,000 when a portion of volume shifts to near sources. The gap can widen with scale or when near sources improve lead times, reducing safety stock and obsolescence risk. The example assumes a longer lead time for the far option adds carrying costs and stockouts, while the near option benefits from faster replenishment and lower expediting needs.

In practice, adopt a two-step approach: first quantify TLC by supplier group (near, regional, globalized), then run sensitivity tests on lead time, demand variability, and currency shifts. Early wins come from aligning procurement strategy with a clear north star metric: TLC per unit by proximity tier. reported figures from clients suggest that a disciplined TLC framework consistently increases margin capture across many firms.

Analytics drive precision. Build a TLC calculator in a shared analytics platform, link inputs to procurement data, and refresh quarterly to reflect changing tariffs, fuel surcharges, and inventory costs. This approach through time reveals how resilience and flexibility affect total cost, not just unit price. It also supports a scalable model that can become a standard, organization-wide capability, with the focus on performance analytics and continuous improvement.

Concrete steps to implement now:

• Map suppliers to proximity bands (near, regional, globalized) and assign TLC components to each.
• Collect data on item cost, inbound freight, duties, insurance, handling, and carrying costs, plus lead times and service level metrics.
• Compute per-unit TLC and annual TLC for each supplier group; compare scenarios that shift 0%, 25%, 50%, and 75% of volume to near sources.
• Run sensitivity analyses for lead time changes, demand volatility, and currency exposure; document expected and long-run time horizons for each scenario.
• Report findings to clients with a clear plan for phased supplier portfolio adjustments, starting with the most impactful categories and expanding as scale increases.

Operational blueprint for firms: build a proactive supply strategy that uses TLC analytics to balance risk and flexibility. Focus on early wins in high-volume SKUs and critical components, then broaden the scope to the full supplier base. The strategy should become part of daily decisions, not a one-off exercise, and should feed into supplier negotiations, contract design, and inventory policies to increase performance across the organization.

Risks to monitor include disruption risk in near supply, currency swings, and capacity limits. Maintain a robust governance cadence, with quarterly reviews and clear ownership for TLC updates, supplier performance, and client reporting. Structured analytics support helps track time-to-value and demonstrates sustained improvements to clients and internal stakeholders alike. The approach aligns with a globalized supply network while preserving the flexibility to adapt quickly when circumstances shift. отредактировано

Resilience gains from local sourcing: reducing disruption exposure

Shift 25% of critical components to regional suppliers by december to cut disruption exposure by up to 40%. This strategy begins with mapping high-risk parts, selecting lean, capable vendors, and establishing clear SLAs that tie to inventory targets and faster replenishment.

The approach has three points shaping the plan: map risk and build local hubs; lean inventory and faster replenishment cycles; provide incentives for suppliers to localize. Executives say feedback from pilots guides full-scale adoption. The model fits a globalized market where tariffs pressure cost and lead times lengthen when supply chains span long distances, and it supports an overall resilience effort across functional teams.

Local sourcing reduces exposure to port delays, weather events, and cross-border friction. By decoupling some components from long freight lanes, firms achieve faster response to demand and steadier service levels, even in peak periods. The impact on inventory carries a premium only where safety stock increases; otherwise, it lowers disruption risk and improves working capital through more predictable shipments and higher fill rates.

edwin, a frontline leader, notes mexicos nearshore sites as a practical extension of lean playbooks, provided the right incentives. linkedin updates from executives help share feedback and align the organization around a single strategy. December milestones aid governance and ensure the full program gauges risk points across categories.

For career teams, the shift proves valuable when shipped parts meet demand, reducing last-mile risk and providing feedback that sharpens the strategy.

Feedback from customers and partners confirms success when proximity becomes a core capability. The three-point model translates into faster recovery, steadier service, and clearer points of comparison for supply risk across geographies.

Supplier selection criteria: prioritizing proximity, visibility, and responsiveness

Start with a proximity-first supplier scorecard. Assign 40% weight to locations near core hubs, 30% to visibility, and 30% to responsiveness. Keep core suppliers within 300–500 miles to cut transport time and reduce exposure to tariff swings. Respondents reported lead-time reductions of 2–5 days and a 5–12% drop in transport costs when core suppliers stayed within that radius, said the chair of the procurement committee. This approach does deliver tangible savings, and it does align with the study’s emphasis on proximity as a value driver.

Enable full visibility across the chain. A unified intelligence layer aggregates data from supplier systems, transport providers, and manufacturing calendars. This smart shaping of risk surfaces exceptions within minutes, so stakeholders can adjust orders, reroute transport, or call in backups. The respondents noted that rapid visibility improved on-time delivery by 15–20% in a 15‑supplier pilot and boosted confidence among officials and working teams.

Proximity informs strategic choices, including reshoring. Whether a firm pursues nearshoring or maintains domestic sourcing, being close to markets reduces handling and speeds delivery. Some manufacturers moved south to shorten cross-border routes and reduce tariff friction where policy shifts occurred, they said. This approach also helps with gaining support from stakeholders and the chair’s leadership, чтобы provide clearer signals for audit and contingency planning. To keep the контента layer accurate, the dashboard data should be from supplier feeds and economic indicators; отредактировано notes confirm updates.

Implementation requires discipline and governance. Appoint a chair, form a cross-functional working group with officials from procurement, logistics, and finance, and run quarterly audits of supplier performance. Embed proximity, visibility, and responsiveness in contract SLAs, with explicit recovery timelines and the ability to switch suppliers quickly. This can be challenging, but the payoff shows in lower stockouts, more reliable service, and improved success metrics. For each supplier, maintain a locations-focused scorecard and a tariffs-aware view of total landed cost, so you know whether proximity or policy changes create the bigger margin of safety.

How to operationalize in practice: 1) map core locations and market reach; 2) implement a shared intelligence platform; 3) train teams to act on alerts; 4) run quarterly audits; 5) report results to stakeholders. The process helps them reduce risk, keep content fresh, away from silos, and move toward a more resilient U.S. supply network. Respondents stressed that engaging them early, along with officials and the chair, drives faster decisions and measurable improvements in service and cost.

Industry hotspots: sectors where proximity adds the most value in the U.S.

Rethink capacity placement by creating regional onshore hubs in sectors with high perishability, regulatory intensity, or critical after-sales service to reduce vulnerabilities in chains. Align labor pools with local demand and empower cross-functional teams to respond quickly to shifts in orders, weather, or policy changes. In a vuca environment, this approach shifts the driver from cost alone to resilience and speed over years.

Food and beverages: Proximity to major urban centers shortens the cold chain, enables faster recalls, and minimizes waste. Localized processing and packaging facilities reduce transit time and boost yield on fresh products, while regional distribution centers shorten last-mile delivery windows.

Healthcare devices and diagnostics: Near-market manufacturing and service hubs shorten validation cycles, improve field support, and simplify regulatory compliance when product updates are needed. In this sector, partnerships with nearby hospitals and clinics create a rapid feedback loop that translates field learnings into design changes.

Automotive components and consumer electronics: Proximity supports flexible, smaller batch runs and just-in-time assembly, reducing inventory while maintaining quality. Local supplier ecosystems enable faster responses to disruptions and reduce the need for costly expediting.

Pharma finished-dose and critical packaging: Finishing, labeling, and containment operations near large medical clusters can improve patient access, serialization tracking, and service levels while meeting regulatory demands, even as APIs stay globally sourced.

Execution playbook: Establish regional chairs in each hotspot to oversee local supplier development and drive continuous improvement. Use regular feedback through linkedin and field teams to adjust assumptions and plans. Maintain контента streams that surface actionable insights and attach источник labels to data points, so teams can trace sources and reallocate capital quickly. They emphasize добавить scenario planning to stress-test supply options in a vuca year.