Five years on from the severe disruptions in global supply chains caused by the Covid-19 pandemic and many companies are still rethinking their supply chain strategy. Ensuing exogenous shocks, including geopolitical instability, natural disasters and rising costs due to inflation and increasing labour expenses, have continued to expose the risks inherent in long and complex supply chains.
US President Donald Trump’s punitive and wide-reaching tariffs, announced on 2nd April, has thrown yet another spanner in the works of global trade flows, as other countries respond in kind. “No one wins in a trade war” has become the mantra of those wishing to avoid the slippery slope towards deglobalisation. In light of these developments, many corporates are looking at building regional supply chains and diversifying their suppliers to improve operational and business resilience.
According to the Trade in Transition 2025 report, businesses are split between spreading supply-chain risk across regions and staying close to home. Almost half (46%) are diversifying geographically to enter new markets and hedge against disruptions, while 42% are localising supply chains to cut transport costs and improve oversight.
Three-quarters are diversifying their supplier base, spreading risk and increasing resilience by working with more partners. However, that brings with it other challenges, such as lower quality and consistency, weaker relationships and higher administrative costs.
“The biggest risk in today’s supply chains is an over-reliance on a single region, supplier or logistics route. Many businesses are still exposed to long, complex supply chains, which can make it difficult to anticipate or respond to disruptions,” says Arpana Amin, Global Product Head of Supply Chain Finance (SCF) at HSBC. “From a treasury perspective, these risks can potentially translate into liquidity stress, production delays or increased working capital needs.”
Closer to home
Kemi Bolarin, Head of Treasury – Europe, GXO Logistics, has seen significant change in the company’s supply chain, driven by the need to bolster resilience, enhance service levels and minimise risk exposure for its blue-chip customers. She reports a notable shift towards nearshoring, especially in regions like North America, Europe and Asia Pacific (APAC).
“Trade uncertainties and supply chain disruptions have prompted businesses to reassess their logistics strategies, prioritising proximity, flexibility and adaptability,” says Bolarin. “As we look ahead, we foresee a global rebalancing of trade, fuelled by nearshoring and reshoring trends.”
She points to third-party forecasts that estimate US$3.5trn in global trade could shift by 2027. “For every 1% of trade that is reshored, a US$1bn warehouse revenue opportunity arises, accompanied by a 3-4% increase in inventory levels to provide greater certainty,” she adds, which bodes well for the global contract logistics company that manages outsourced supply chains and warehousing. The wave of nearshoring and reshoring is also driven by shifting consumer expectations and technological improvements. “The rapid expansion of e-commerce and omnichannel retail has heightened demand for faster, more efficient fulfilment, leading to increased investment in micro-fulfilment centres and urban warehousing,” Bolarin says.
Arnd Weckes, Head Working Capital D/A/CH at Deutsche Bank, highlights the role that technological advancements, as well as government inducements, are playing in manufacturing, for example. “Many goods that used to be produced offshore for labour cost reasons can today increasingly be done by robots, which has led manufacturers to reshore production,” he says. “Additionally, reshoring has been incentivised by governmental programmes, such as the US inflation Reduction Act under the [Joe] Biden administration, which brought a lot of new investment into the country.”
Weckes reports European companies returning to Eastern Europe and US companies moving out of China and into Mexico. “Due to concerns around developments in China, many companies – especially in Germany – are looking to diversify supply chain risk by moving into other Asian countries, such as India, Vietnam and the Philippines,” he adds.
Natasha Condon, Global Head of Trade and Working Capital Sales at J.P. Morgan Payments, also sees a noticeable shift towards both nearshoring and ‘friendshoring’, as evidenced by world trade data.
“ASEAN members and Mexico have successfully attracted local production that was once concentrated in China,” she says. “However, it’s important to remember that changes in trade flows take time; while a ship on the water can be diverted easily, relocating industrial manufacturing capacity requires time and significant capital investment.”
Climate change and sustainability concerns are also fuelling the nearshoring trend, as carbon emissions are lower when transporting goods from nearby countries. “Climate change leading to rising physical supply chain risks has led to a greater focus on sustainable supply chain practices, including local sourcing and reducing carbon footprints,” says Cynthia Tchikoltsoff, Head of Global Trade Solutions, APAC at BNP Paribas.
GXO views nearshoring as a major growth opportunity, as businesses increasingly look to localise their supply chains to improve agility, manage costs and mitigate risks, according to Bolarin.
“In the US, companies are reshoring manufacturing and distribution centres to diversify supply sources and shorten lead times,” she says. “In response, we have strategically expanded our regional infrastructure to better support these evolving needs. Similarly, in Europe, we are scaling multi-client warehousing and regional distribution hubs to navigate supply chain complexities and ensure seamless cross-border operations.”
Visibility and control
According to Amin, building supply chain resilience is no longer just an operational issue. “To enable truly resilient supply chains, treasurers need visibility, flexibility, control and strong relationships across their supplier base,” he says. “Treasury can support this by leveraging artificial intelligence (AI) and data-driven technology to track goods throughout the manufacturing and delivery cycle enabling more accurate production planning.”
In addition, by pivoting supplier relationships away from transactional to strategic, Amin believes that treasurers can build flexibility as purchase requirements evolve, ensuring financing flows smoothly through the chain. “Treasurers should be supporting suppliers at every stage throughout the supply chain, both pre- and post-shipment of goods and going deeper into the supply chain to build resilience throughout multiple tiers,” he adds.
The key word when thinking about resilience is ‘agility’, according to Condon. “Treasurers should be thinking about whether they have built enough agility into their business so they can respond quickly and nimbly to disruption,” she says. “Maybe you need a bit more of a liquidity buffer than before, or you want your cash in a different country.”
She advises that all corporates should be reviewing their business to spot risks in advance and ‘stress-testing’ the supply chain for potential impact. “And once you have done this basic risk management work, then you have the breathing room to make thoughtful strategic decisions and can reconfigure your supply chain for the evolving landscape,” she says.
As a global contract logistics provider, increasing resiliency in GXO’s supply chain requires a proactive, multi-faceted approach to minimise disruptions, adapt to market fluctuations and ensure seamless operations, according to Bolarin.
“Our strategy is anchored in diversifying suppliers and carriers, reducing dependency on any single partner by cultivating relationships with multiple regional and local carriers and sourcing from diverse geographic locations to mitigate risks such as political instability or natural disasters,” she says.
GXO has also strengthened technology and visibility by adopting a cloud-based warehouse management system that enhances coordination, optimises inventory management and provides real-time insights across the supply chain.
“To improve workforce agility, we implement cross-training programmes that enable employees to handle multiple roles during peak periods or disruptions, leverage flexible staffing models to scale operations as needed, and integrate robotics and automation to enhance safety and efficiency,” she says.
Additionally, GXO enhances risk management and contingency planning by developing robust disaster recovery strategies for various scenarios.
“Regular stress-testing of our supply chain helps identify vulnerabilities, while collaboration with insurance providers ensures financial risk mitigation,” Bolarin says, illustrating Condon’s point. “By embedding these strategies into our operations, we cultivate a resilient, agile and adaptive supply chain – one that not only withstands challenges but also positions us as a competitive and forward-thinking leader in the logistics industry.”
SCF and working capital
Treasurers play a critical role in enabling business momentum and fortifying supply chains. They can work with their banks to leverage numerous working capital techniques such as receivables, payables and inventory financing to enable business, derisk supply chains, improve financial indicators and build more sustainable value chains, according to Tchikoltsoff.
Given the nature of warehousing, transportation and reverse logistics, GXO employs strategic financial solutions to optimise working capital and enhance liquidity. “These financing strategies enable us to reduce the need for large amounts of upfront capital, resulting in more efficient use of our working capital,” Bolarin says.
She explains that the improved payment terms with suppliers and timely receivables collection all contribute to a healthier cash flow, allowing GXO to reinvest more quickly into other areas of the business.
“This enhanced cash flow flexibility supports growth, strengthens financial stability and allows us to capitalise on new opportunities, while maintaining optimal liquidity levels,” she adds. “These strategies not only improve working capital but also provide us with greater operational agility, enabling us to better respond to market shifts and customer needs.”
Specifically, SCF programmes are often seen as a way to strengthen the supplier relationship, as well as help businesses improve their working capital, by extending payment terms without putting pressure on suppliers. For suppliers, SCF can offer earlier access to affordable funding based on the buyer’s credit profile, supporting cash flow, reducing risk and strengthening relationships, according to Amin.
“Many suppliers may face tight margins and rising costs, so the ability to access timely liquidity can make a significant difference in managing their cash flow and working capital cycle,” he explains. “This in turn bolsters supplier loyalty and customer prioritisation, as SCF programmes free up cash early for the suppliers without tying up their own credit facilities.” Treasurers can also use SCF programmes to improve forecasting, standardise processes and increase visibility over outbound cash flows, he adds.
“As companies shift to focus on resilience and visibility, the emergence of pre-shipment solutions enables financing providers to extend financing to suppliers much earlier within the supply chain based on an accepted purchase orders which is then settled against the invoice proceeds,” says Amin. “This further strengthens the supply chain by reducing the time taken for suppliers to receive payment and enabling them access to financing during the manufacturing stage.”
SCF continues to grow as a financing mechanism. According to the World Supply Chain Finance Report 2025, the global SCF volume has increased by 8% to US$2.46trn and funds in use up by 5% to US$942bn. Tchikoltsoff views SCF as an opportunity for treasurers to partner with their procurement and sales teams to support business growth and resilience. For Weckes, such a partnership is often a key to the success of an SCF programme. “While treasury is an important stakeholder when it comes to building supply chain resiliency, they need to lean on procurement as the latter are ultimately in charge of purchasing and traditionally consider themselves to be the owner of the supplier relationship,” says Weckes.
“I’ve seen many SCF mandates, which have been initiated by treasury to optimise liquidity and balance sheet ratios, end up being unsuccessfully implemented because they were lacking procurement buy-in,” he continues. “No one in procurement was willing to discuss lengthening payment terms with suppliers because it’s not one of their key performance indicators.” As such, he believes that C-suite support for a SCF programme is often required.
The Head of Treasury in China at a multinational company based in Germany reports that its procurement department uses the SCF programme as a leverage to negotiate better pricing with suppliers. However, overall utilisation is low.
“Frankly, I am not sure why that is. It could be that our procurement department is only offering the programme to a limited number of suppliers. It could also be that our suppliers are relatively more resilient than their competitors in terms of funding and financing capability,” they say.
Previously the treasury team conducted analysis on dynamic discounting, with the intention of leveraging extra liquidity the company had in China, but did not fully roll it out. “Our headquarters’ view is that since the subsidiary is still with high leverage at the group level, extra liquidity should be centralised and provided to headquarters, rather than use it to support supplier financing,” said the Head of Treasury.
Future-proofing
While there is no shortage of articles predicting that AI will protect global supply chains, Anurag Chaudhary, CEO of Pinnacle Trade Finance, advises taking a “back-to-basics” approach to resiliency and pushing SCF programmes further down the supply chain. “The key for treasurers looking to future-proof their supply chain is to explore ‘one-stop’ technology solutions targeting vendors not usually financed by global relationship banks, ie vendors based in emerging markets, tail-end suppliers and indirect spend, such as logistics,” he says. “Also, they should leverage local and regional banks to on-board the vendors to ensure working capital finance benefits reach a wider range of suppliers.” He believes that this approach will help bring capital and liquidity where it is needed within the buyer’s end-to-end supply chain and optimise their cost of goods sold.
Condon’s advice to treasurers is to prepare for change. “Disruption creates opportunity, and the companies that are best positioned to capture that opportunity will be the success stories. That could mean moving production to new markets, digitalising trade processes to reduce cost, or using financing tools to offer a better deal to customers than competitors,” she says.
“A treasurer needs to be agile and closely follow the market given the current level of turmoil,” adds Weckes. “They need to ensure that they are clear on their own cash flow, have visibility where they stand in real time, do stress tests and try to optimise liquidity at every turn. Improving working capital management is always worthwhile to explore, as much can be accomplished by transforming internally.”
Amin advises treasurers to think beyond efficiency and focus on adaptability, sustainability, data-driven insights, supplier resiliency and eliminating concentration risk.
“By leveraging technology and data, treasurers can forecast more accurately, model different scenarios and respond to disruption faster. Flexibility in production and stronger supplier relationships enables companies to pivot quicker through uncertainties be it geopolitical, climate, financial or economic disruption,” he says.
To future-proof its global logistics network, GXO is implementing a strategic, technology-driven approach that enhances efficiency, mitigates risks and ensures long-term resilience, according to Bolarin. The company is also strengthening resilient sourcing strategies by diversifying supplier partnerships, prioritising nearshore and friendshore sourcing to reduce exposure to high-risk regions and improve supply chain stability.
“By integrating these future-focused initiatives, we are building a supply chain that is not only agile and adaptive but also equipped to withstand evolving market dynamics and technological disruptions,” she says.
