Weighing the Pros and Cons of Friendshoring During a Geopolitical Conflict

Description

Weighing the Pros and Cons of Friendshoring During a Geopolitical Conflict: Abstract

Estelle Allaire was a sourcing analyst at Beaucer, a French manufacturer of specialty metal parts. Just as Allaire was looking into expanding the supply base for nickel, her task got turned upside down by Russia’s invasion of Ukraine in February 2022. Beaucer’s nickel supplier purchased its nickel ore from Russia, and not only did the war cause nickel prices to soar to historic highs, but it also posed a reputational risk for firms that procured raw materials of Russian origin. As Allaire had to fulfill Beaucer’s third-quarter nickel needs, she understood that she would have to factor the implications of the geopolitical conflict into her sourcing plan.

Teaching objectives

• Identify the consequences that geopolitical conflicts have for global commodity markets.
• Explain the concept of friendshoring and its implications for global supply chains and sourcing decisions.
• Analyze the operational-reputational risk trade-off of implementing a friendshoring strategy.
• Develop a sourcing plan that addresses friendshoring considerations and their potential effects on the firm.
• Identify the ethical dilemmas associated with the concept of friendshoring.

Additional information

Also available in French.

Teachers’ notes are available for university teachers only. Please contact the HEC Montréal Case Centre.