• 81% of executives anticipate that the majority of their U.S.-serving supply chains will be located in the Americas once strategic shoring shifts are completed.

• 66% of executives cite political and economic uncertainty as key reasons prompting supply chain re-evaluations.

• 64% of business leaders consider indirect taxes, government grants/incentives, and transfer pricing rules at the outset of strategic shoring decisions.

New York, New York--(Newsfile Corp. - October 8, 2024) - Business executives are strategically reshaping their supply chains to achieve greater efficiencies, according to a new report—The Proximity Premium—released today by KPMG LLP, the U.S. audit, tax and advisory firm. Nearly three-quarters of business executives report that strategic shoring has successfully enhanced supply resilience and operational agility.

The globalized and long supply chains have proven vulnerable to disruption. This vulnerability, coupled with geopolitical and ongoing economic uncertainty, are driving businesses to draw their supply chains closer to the Americas to better serve the U.S. market, according to 76% of the survey respondents. Why? To reduce lead times, diversify supply, maximize access to talent and minimize risk.

Supply chain fragility can weaken the larger business ecosystem and exacerbate global inflationary pressures. With 61% of executives reporting that the volatile global trade environment is forcing their business to refocus on regional and domestic sourcing and distribution, it underscores the urgency to balance critical supply chain needs.

More than half of executives with higher performing supply chains (55%) also recognize the importance of navigating the tax and regulatory landscape, while 53% say regulators and tax officials are significant influences in strategic shoring decision-making. By integrating tax strategies early in the process and scenario plan, businesses can realize cash flow efficiencies and a competitive advantage, ensuring a sound shift in supply chain strategy.

"The Proximity Premium" report from KPMG draws on insights from 250 U.S.-based executives at companies with annual revenues of at least U.S.$1bn and highlights trends and challenges related to strategic shoring.

Additional findings and leadership quotes:

Companies are streamlining their supply chains in the Americas

Jean-Pierre Trouillot, Partner, Deal Advisory, KPMG U.S., and Latin America Regional Advisory Leader, KPMG Americas*: "Business executives are re-evaluating their supply chain assumptions with a primary focus on regional and domestic sourcing and distribution to mitigate geopolitical and economic uncertainty. Companies are seeing strategic shoring as a way to improve supply resilience and operational agility, offering them the benefits of proximity, cost efficiency and access to resources."

• 76% of survey respondents are prioritizing immediate strategic shoring actions.

• The Americas' share of supply chains to the U.S. is expected to rise by 16%, while the average number of locations in a single supply chain is being consolidated for efficiency measures, falling from 2.7 to 2.4 locations over the next three years.

Strategic shoring bolsters supply chain resilience and optimizes cost efficiency

Mary Rollman, Principal, Supply Chain Leader, Advisory Practice, KPMG U.S.: "It is important for companies to challenge and reassess the factors and assumptions driving supply chain decisions to strike the right balance between cost efficiency, supply chain flexibility and sustainability."

• 73% of executives say their company has increased their supply chain's cost efficiency via strategic shoring, enhancing their operational and financial performance.

• While still the primary goal in supply chain strategies, cost as an outcome has declined in importance over the past two years by 4 percentage points. In contrast, less tangible ambitions such as speed, flexibility and sustainability have gained importance by two, three, and two percentage points, respectively.

• 61% of executives say strategic shoring will help reduce the carbon footprint attached to products, positively impacting their sustainability efforts.

Tax, data and analytics: Most important capabilities to boost sourcing strategies

Doug Zuvich, Tax Partner, KPMG U.S., and Latin America Regional Managing Partner, Tax and Legal*, KPMG Americas: "Companies don't always consider tax as part of their overall strategic supply chain cost assessment. This could be a big miss. A tax-first mindset, combined with a data-driven, connected thinking approach, can aid business executives to better understand how different factors interact and impact supply chain decisions."

• Executives report that the current tax environment (23%) and regulatory policies (31%) are among the top five challenges to achieve certain strategic shoring initiatives.

• 53% of executives say that regulators and tax officials are significant influences on their strategic shoring decisions - second only to shareholders, at 56%.

• 43% of executives identify data and analytics capabilities as most important to advancing sourcing strategies.

A focused regional supply chain contributes to a more stable and robust macroeconomic environment

Meagan Schoenberger, Senior Economist, KPMG U.S.: "A disruption in the supply chain bears the risk of increased inflation and consequently a potential rise in interest rates. That can impact everyone."

• 55% of executives view resilience and faster time to market as the dominant objectives pushing their companies to nearshore.

• A majority (75%) of executives say their company has successfully used strategic shoring to strengthen its supply chain resilience.

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About the survey

The 2024 KPMG The Proximity Premium report features research based on a wide-ranging survey of 250 executives, conducted during June and July 2024. Surveyed executives had the suitable expertise to provide representative insights into the realities of strategic shoring in today's environment, all the executives surveyed for this study are U.S.-based and work for companies that have either moved some of their supply chain operations to the Americas during the past five years, or are currently doing so, or planning to do so in the near future. All companies surveyed have annual revenues of at least U.S.$1bn and come from one of the following sectors: industrial manufacturing; consumer packaged goods; automotive; healthcare; technology; retail; agriculture; logistics and distribution; pharmaceuticals and life sciences; transport; telecoms, media and entertainment; energy and utilities (including oil and gas, power, chemicals and renewables); or aerospace and defense.

About KPMG LLP

KPMG LLP is the U.S. firm of the KPMG global organization of independent professional services firms providing audit, tax and advisory services. The KPMG global organization operates in 142 countries and territories and has more than 273,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

KPMG is widely recognized for being a great place to work and build a career. Our people share a sense of purpose in the work we do, and a strong commitment to community service, inclusion and diversity and eradicating childhood illiteracy. Learn more at www.kpmg.com/us.

Download The Proximity Premium report

Media Contacts:

Andreas Marathovouniotis
Associate Director, Corporate Communications
amarathovouniotis@kpmg.com
Mobile: +1 917 957 1174
LinkedIn

Tami Komiya
Manager, Corporate Affairs
tamikomiya@kpmg.com
Mobile: +1 949 701 5828
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*All professional services are provided by the registered and licensed KPMG member firms of KPMG International. KPMG U.S. does not provide legal services, and these services are provided only by KPMG member firms in Latin America that are permitted to do so by law. KPMG Americas does not provide professional services to clients and does not participate in client engagements.

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