From “Just-in-Time” to “Just-in-Case” to… “Just Next Door?”
When global supply chains fractured in 2020, companies faced a reckoning. For decades, operational models had been optimized for efficiency above all else—minimal inventories, single-sourced suppliers, and tightly synchronized “just-in-time” logistics. COVID-19 exposed the fragility of that system overnight.
In the five years since, organizations have been fundamentally rethinking what supply chain optimization means—and diversification has emerged as the central theme.
Supply chain diversification began as an emergency response but has since matured into strategic doctrine. The old calculus of lowest landed cost has been replaced by a new equation, balancing risk, resilience, and responsiveness. Companies now blend “just-in-time” (JIT) and “just-in-case” (JIC) models—holding buffers for critical components while still relying on leaner flows for predictable SKUs.
Martec’s research over dozens of post-pandemic projects confirms what many global analysts have observed: firms that weathered disruption most effectively were those that had already built structural redundancy—dual sourcing and diversified supplier bases. Many also furthered these defenses by reversing the decades old trend of global centralization in logistics, and adopting instead greater regionalization of their manufacturing supply chains.
According to McKinsey’s 2024 Optimizing North American Supply Chains report, nearly 70% of manufacturers now view regional diversification as a strategic imperative, not an emergency measure. SupplyChainBrain adds that firms with mature risk sensing and multi-sourcing programs recovered from pandemic-era shocks up to twice as fast as peers who had stayed global and lean.
The Rise of Regionalization
Among the various diversification strategies, regionalization has taken center stage. Rather than managing sprawling global networks vulnerable to bottlenecks and tariffs, many companies are adopting “make-where-you-sell” models—building manufacturing and distribution capacity closer to end markets.
In practice, regionalization often starts with ensuring that roughly 20% of a company’s need is sourced from a secondary or tertiary supplier somewhere else in the world. That alone can make the difference between resilience and exposure when disruptions occur.
Regionalization isn’t a binary move; it exists on a continuum. Some firms are simply adding nearshore redundancy, while others are decentralizing production entirely into regional nodes that combine manufacturing, logistics, and even innovation functions. The idea is that you’re eating a little bit more in production costs because you’re not sourcing for the absolute lowest cost, but you’re gaining the ability to avoid much larger shocks from global disruptions.
That trade-off has proven worthwhile. Nearshoring to countries like Mexico and Canada allows North American firms to reduce geographic and tariff risks while maintaining access to competitive labor costs. For some, the strategy also reduces transit time by weeks and cuts exposure to unpredictable chokepoints like the Suez Canal or the Panama route.
Automation and Administration
Automation technology has further narrowed the cost gap between overseas and regional manufacturing. In the semiconductor industry, for example, traditionally U.S. chips were sent to Taiwan for packaging, then shipped back. Now we’re seeing what’s called advanced or automated packaging: robotic systems that can do that process domestically at a competitive cost. In other words, automation offsets wage differences while strengthening regional supply security.
At the policy level, regional trade agreements like the USMCA and RCEP have made regionalization more feasible. These agreements streamline intra-regional trade, create tariff advantages, and encourage foreign direct investment. Simultaneously, growing protectionism and Section 301 tariffs have incentivized firms to reduce exposure to long-haul supply chains—particularly in strategic sectors such as EVs, semiconductors, and steel.
Sustainability has emerged as a parallel motivation. Long-distance shipping is one of the most visible and measurable contributors to corporate carbon footprints, and localized networks make it easier for companies to meet carbon-reduction pledges. For many of the companies we talk to, sustainability is a sweetener rather than a major influencer, but it’s increasingly becoming a non-negotiable part of supply chain design.
The pandemic-era shift also revealed how geography and resilience intertwine with innovation. Companies that brought production and supply capabilities closer to their end markets have been able to respond faster to customer demand, experiment with smaller runs, and localize product design. This “regional autonomy” is redefining how supply chains and product development interact—an evolution that analysts from the International Trade Council call “localized innovation loops.”
The Benefits—and the Boundaries
The shift toward regionalized operations has yielded clear gains. A 2024 PwC survey found that firms that localized part of their supply chains reported improvements across six key metrics:
- 82% saw improved resilience
- 77% achieved cost reductions
- 76% reported faster market responsiveness
- 71% cited efficiency gains
- 65% improved quality control
- 59% recorded sustainability benefits
Yet, as PwC cautions, too much localization can erode these advantages. Beyond a certain threshold—what the firm describes as “Stage 3,” when about 75% of inputs are locally sourced—cost efficiencies plateau and may even reverse. The complexity of managing multiple autonomous regional networks can drive up overhead, data management burdens, and labor costs.
Once you proliferate regional nodes, you need far more sophisticated systems to track and manage them: real-time cargo monitoring, digital mapping, supplier financial health tracking. The more you regionalize, the more complex your system becomes.
Trade Policy, Labor, and Technology
Tariffs and labor dynamics have reinforced this evolution. Section 301 tariffs on Chinese imports—up to 100% in some strategic sectors by 2025—have pushed companies to reconsider their cost structures and sourcing footprints. At the same time, rising labor costs and recurring port strikes have underscored the risk of overreliance on single corridors.
Automation has been the great equalizer. As The Logistics News reports, technology-led regionalization is now a defining feature of modern supply strategy: robotics, predictive analytics, and digital risk sensing allow firms to operate closer to home without sacrificing efficiency.
The Research Imperative
In such a complex environment, data-driven insight is critical. When companies commit to regionalization, they face two big questions: where everyone else is going—and where they should go. Those aren’t always the same answer.
One way to resolve that uncertainty is through market sizing, benchmarking, and supplier mapping. For example, by analyzing shifts in contract manufacturing networks, one can identify not just cost advantages but the innovation potential of emerging regional hubs.
Market research becomes the lens through which supply strategy transforms from reactive to proactive—clarifying not only how to regionalize, but why and where it creates competitive advantage. This can be achieved through:
- Competitive intelligence research
- Analysis of published reports and publicly available data
- Interviews with industry experts, analysts and stakeholders
- Market sizing through triangulation
- Cost modeling, scenario building, and opportunity analysis
Regionalization is not a passing phase—it’s the first chapter of a longer narrative in supply chain reinvention. As trade policies tighten and sustainability expectations grow, companies will continue refining their balance between global reach and regional control.
Future installments in this Martec Insights series will explore other dimensions of diversification reshaping supply chains: hybrid inventory models, digital risk sensing, and the diminishing returns of over-localization. Together, they form a new operational playbook—one built not just to survive disruption, but to turn resilience into strategy.If you have any questions in the meantime as this series is rolled out, please do not hesitate to reach out.
John Lorinskas and Tatyanna Dadabbo serve as project managers with The Martec Group. Learn more about each and contact them at the respective links.
