What will the supply chain of the future look like?That question, as we brace for the continuing effects of COVID-19, is at the top of executives’ minds.And yet, each vision seems to beget more questions about alternative supply chain models and contract terms, about identifying supplier distress and implementing new technologies, about where suppliers will be located and, of course, about striking the right balance between cost-efficiency and resiliency. Our survey of nearly 150 manufacturing executives—more than 60% of whom are members of their company’s C-suite and work in a wide array of industries—offers a perspective on what business leaders are thinking when it comes to these vital questions, as well as how the future supply chain is beginning to take shape.

What is clear is that some change is certain, in light of not only the pandemic, but also the geopolitical landscape and economic headwinds that preceded it. Our respondents know this—only 7% are not undertaking contingency planning efforts to prepare for future disruptions (Q1).

What will these preparations entail?

For starters, 43% of respondents have already withdrawn some of their production or sourcing from China or are planning to do so (Q11). Many of these manufacturers are looking to reshore closer to home,whether in the U.S., Canada, or Mexico (Q12).Seventy percent agree that companies will, as a result of the pandemic, lessen their focus on sourcing from the lowest-cost supplier in favor of higher supply chain

resiliency (Q7). A similar percentage (62%) agrees that the focus on just-in-time (JIT) manufacturing models will also decrease (Q8).Relatedly, over the next year, many manufacturers expect to: strengthen relationships and increase

transparency across their supply chains (42%),multi-source products to reduce reliance on any one supplier (39%), and diversify their supply chains among multiple geographies (30%) (Q3). They will also review contract terms (25%)—especially with regard to sole source and force majeure provisions—and consider new technologies, such as tools to improve supply chain visibility and tracking (47%), and operational analytics (39%) (Q13). It will not be easy, since business leaders continue to face growing concerns over consumer demand (58%), employee safety (43%), and additional challenges wrought by COVID-19 and evolving geopolitical risks (Q2). However, the case for supply chain transformation has been simmering for some time and the virus may finally force change.

“There are lessons to be learned from this pandemic,”said Vanessa Miller, Co-Chair of Foley’s Coronavirus Task Force and Co-Chair of the Supply Chain Team. “Among them is that cost may not be the only consideration, that companies can stabilize their supply chains by bringing on alternative suppliers or moving certain functions in-house, and that technology can help stem future disruption. But the principal lesson—wake-up call, really—might simply be that such disruptions are an unshakeable reality, and that executives must have a proactive strategy if they hope to head them off.”

In what follows, we aim to inform those strategies by offering insights from our survey and practice leaders in four key areas:

I. Alternative Supply Chain Models

II. Strengthening Supplier Relationships

III. Diversifying Supply Chains

IV. Supply Chain Innovations and Efficiencies