Global supply chains are under pressure to become more regional without sacrificing efficiency. Schneider Electric’s approach shows how multinational organisations can redesign their networks to improve resilience while preserving the advantages of global scale.
The debate around global supply chains has become increasingly polarised. One side argues that companies should regionalise manufacturing to reduce geopolitical risk and improve resilience. The other warns that moving production closer to customers comes at the expense of efficiency, economies of scale and cost competitiveness.
In reality, neither approach offers a complete answer.
For global manufacturers, the challenge is no longer deciding between globalisation and regionalisation. It is determining which parts of the supply chain should remain global, which should become regional and how often those decisions should be reassessed.
Schneider Electric provides an interesting example of this balancing act. Rather than abandoning its global manufacturing network, the company has gradually redesigned it to improve resilience, simplify operations and reduce dependence on long, fragile supply chains. The result is not a regional supply chain replacing a global one, but a network that is continuously adapting to changing business conditions.
Global networks still create competitive advantage
The last few years have prompted many manufacturers to rethink globally integrated supply chains. Schneider Electric, however, has not responded by abandoning global manufacturing. Instead, it has focused on making its global network more adaptable.
Rather than reshoring production indiscriminately, Schneider continues to operate an extensive international manufacturing footprint while continuously evaluating where regional production, inventory and logistics can improve resilience. Its objective is not to replace global scale, but to make that scale more responsive to changing customer demand, geopolitical risk and supply disruptions.
This reflects a broader philosophy within Schneider’s supply chain. Global manufacturing remains a competitive advantage, provided the network is continuously redesigned rather than treated as static.
Regionalisation is not the same as localisation
Following the COVID-19 pandemic, Schneider Electric increased its focus on locating production closer to demand where it improved resilience. Importantly, the company did not apply that strategy universally.
Instead, Schneider uses network modelling to determine which products benefit from regional manufacturing and which should continue to be produced centrally. The analysis also extends to inventory placement, where modelling has shown that centralising certain slow-moving products can improve reliability despite longer lead times.
Rather than pursuing regionalisation as an objective in itself, Schneider treats it as a series of product-by-product and market-by-market decisions.
Where should the network become regional?
This is one of the most difficult questions facing supply chain leaders today. Regional manufacturing can reduce transportation distances, shorten lead times and improve responsiveness to customers. It can also reduce exposure to border delays, tariffs and geopolitical disruption.
At the same time, additional manufacturing locations increase fixed costs, duplicate capabilities and introduce greater operational complexity. Schneider addresses these trade-offs through continuous network design rather than one-time restructuring projects.
Instead of asking whether an entire supply chain should become regional, the company evaluates individual products, facilities and inventory strategies.
- Which products require proximity to customers?
- Which manufacturing sites should remain globally focused?
- Where does additional safety stock improve resilience?
- Where does inventory centralisation actually increase reliability?
By asking these questions continuously, Schneider avoids treating network design as a one-off strategic exercise.
Network design has become a continuous capability
One of the biggest changes within Schneider Electric has been the evolution of network design from an occasional project into an ongoing business capability.
After initially relying on external consultants, the company established an internal modelling team responsible for continuously evaluating manufacturing locations, inventory positioning and logistics flows. As the capability matured, the scope of analysis expanded beyond transportation cost and service levels to include resilience, carbon emissions, simplification and regionalisation.
Instead of redesigning its network only when disruption occurs, Schneider continuously reassesses whether its operating model still reflects current business conditions.
Simplification can strengthen resilience
Schneider Electric’s strategy demonstrates that resilience is not always created by adding more assets to the network. In many cases, it comes from reducing unnecessary complexity.
One example is shipment consolidation. Rather than shipping products independently from factories or distribution centres, Schneider uses port hubs to consolidate shipments before international transport. Fuller containers reduce transportation costs, improve asset utilisation and lower carbon emissions while simplifying logistics operations.
This focus on simplification extends beyond transportation. By reducing unnecessary movements and complexity across the network, Schneider creates a supply chain that is easier to manage, quicker to adapt and more resilient when disruption occurs.
Balancing resilience with commercial reality
Every network decision involves compromise. Increasing regional production may improve resilience while increasing manufacturing costs. Holding additional inventory may improve customer service while tying up working capital.
Centralising slow-moving products may reduce inventory costs while extending lead times. Schneider Electric’s approach demonstrates that these decisions should not be driven by fixed principles or political trends.
Instead, they should be evaluated using robust data, realistic assumptions and close collaboration between logistics, finance, manufacturing and regional operations.
Perhaps most importantly, the company recognises that analytical models are not perfect predictors of operational reality. Rather than committing to every projected saving, Schneider deliberately sets conservative expectations, acknowledging that implementation always introduces variables that models cannot fully anticipate.
That discipline strengthens confidence in transformation while reducing the risk of overpromising results.
Designing a more resilient network
Schneider Electric’s experience suggests that the future of supply chain design lies somewhere between global efficiency and regional resilience.
Organisations do not need to choose one model over the other. Instead, they should continuously evaluate which products, facilities and inventory strategies are best suited to changing market conditions.
Building internal network design capability is becoming increasingly important as supply chains face greater uncertainty. Regionalisation decisions should be based on data rather than assumptions. Simplification should be viewed as a resilience strategy rather than simply a cost initiative. Finally, network design should become an ongoing business capability instead of a project undertaken only during periods of disruption.
The supply chains that outperform over the next decade are unlikely to be the most global or the most regional. They will be the ones that know when to be both.
Frequently Asked Questions
- What is supply chain regionalisation?
Supply chain regionalisation is the practice of locating manufacturing, sourcing or distribution closer to the markets where products are sold. The objective is to improve resilience, reduce lead times and minimise exposure to geopolitical or logistics disruptions while maintaining commercial performance.
- How does Schneider Electric balance global and regional supply chains?
Rather than replacing its global manufacturing network, Schneider Electric continuously evaluates which products, factories and inventory locations should remain global and which should move closer to regional demand. Network design modelling helps guide these decisions based on cost, resilience, service levels and sustainability.
- Why are companies redesigning supply chain networks?
Global disruptions, geopolitical uncertainty, tariffs and changing customer expectations have made static supply chain networks less effective. Organisations are redesigning their networks to improve flexibility, reduce risk and create greater responsiveness while protecting long-term competitiveness.
- Does regional manufacturing always improve resilience?
Not necessarily. While regional manufacturing can shorten lead times and reduce transportation risk, some products remain more efficient when manufactured centrally. Effective network design balances resilience, cost, customer service and operational complexity rather than assuming one model fits every product.
- What is the biggest lesson from Schneider Electric’s network strategy?
The biggest lesson is that network design should become a continuous capability rather than an occasional project. Organisations that regularly reassess manufacturing locations, inventory positioning and logistics flows are better equipped to respond to changing market conditions and build long-term resilience.
