Navigating New Partnerships - How Friendshoring is Reshaping Global Supply Chains

In 2024 and early 2025, the global supply chain faced challenges on multiple fronts. Houthi attacks have disrupted Red Sea shipping lanes, causing weeks-long delays and rising freight costs. Taiwan Strait tensions continue to rattle electronics and pharma exporters. And the war in Ukraine, now in its fourth year, continues to strain energy markets and shows no sign of resolution. These events aren’t isolated; they are part of a growing pattern of geopolitical volatility that has fractured the idea of a predictable and stable global economy. 

For the global industries ranging from pharmaceuticals to semiconductors and automotive, the stakes are exceptionally high. Even today, countries continue to rely heavily on a few production hubs, mainly China, leaving entire sectors vulnerable to single points of failure. For instance, India still relies on China for up to 70% of its API and intermediates imports. 

In this new landscape, governments and companies are asking a new kind of question: Can we source critical materials from countries we trust, not just those that are cheapest?

This question is giving rise to a powerful realignment strategy: friendshoring. Let’s explore how this quiet but significant shift is reshaping the global supply chains. 

What is Friendshoring? Why is it Gaining Traction? 

Friendshoring, simply put, is relocating and thereby diversifying a business's supply chains to countries that are not only low-cost but also politically, socially, and economically aligned with you. 

The concept of friendshoring gained prominence in 2022 when U.S. Treasury Secretary Janet Yellen drew attention to a growing vulnerability in global trade. She cautioned that economic overdependence on politically unstable or adversarial nations posed significant risks, particularly when it came to critical inputs such as raw materials, technologies, and pharmaceuticals.

Over the past few decades, global manufacturing followed a clear system, making it where it's cheapest, which led to “offshoring”. Then came “reshoring,” a movement to bring production back to a business's home country for reasons like better quality control, shorter lead times, and stronger customer relationships. This concept gained traction, especially after the pandemic.

Friendshoring is somewhere in the middle ground. A sort of hybrid model which asks, “What if we spread our supply chains across countries we trust? Countries with shared values, predictable regulations, and stable politics?”

This shift is being driven by more than just fear. It's about building resilient, value-aligned supply chain ecosystems.

According to the McKinsey Global Institute, more than 180 companies worldwide have announced supply chain shifts in the past two years, with over 60% citing geopolitics as a key reason.

Pharma Sector’s Overdependence 

Today, the world’s pharmaceutical supply chain is heavily concentrated in just a handful of countries. During the early months of the COVID-19 pandemic, countries around the world found out just how fragile this setup was. With factories shutting down and borders closing, even basic medications like paracetamol and antibiotics became hard to source.

The vulnerabilities in the pharma supply chain aren't just limited to API sourcing; they reach deep into how the entire system functions. Before a medicine can be sold, it needs to be inspected and approved by government regulators. The problem? Most of those checks are done by just a handful of countries, including the U.S., EU nations, and Japan. So, if even one of them faces delays or political issues, hundreds of essential drugs can be held up, not because they’re unsafe, but because the paperwork stalls. 

Take inspections, for example. According to a 2024 report from the WHO, over 80% of new drug approvals in low and middle-income countries rely on inspections carried out by regulators from high-income countries. 

Rise of Trusted Hubs in Global Manufacturing

India - Beyond Just Pharmaceuticals

Through the QUAD partnership between India, the U.S, Japan, and Australia, India is becoming a strategic hub for pharma collaboration, regulatory harmonization, and technology transfer in the Indo-Pacific.

• Under the Production Linked Incentive (PLI) scheme, the Indian government has committed over $25 billion to support domestic production across 14 sectors.
• Dedicated API parks in Andhra Pradesh, Gujarat, and Himachal Pradesh are being developed with integrated standard facilities, wastewater treatment, and supply chain infrastructure, thereby reducing both costs and ecological footprints.
• Through the QUAD partnership between India, the U.S, Japan, and Australia, India is becoming a strategic hub for pharma collaboration, regulatory harmonization, and technology transfer in the Indo-Pacific. 

Mexico & Eastern Europe 

• Mexico is becoming a friendshoring hotspot for U.S.-based industries, from pharma to electronics and auto components. Mexican exports to the U.S. grew by 14% in 2024, and the country is now hosting new facilities by multinationals seeking shorter logistics cycles and reduced border risk.
• Countries like Poland, Hungary, and the Czech Republic offer EU incentives for local high-tech, biotech, and energy storage production..

Southeast Asia - The “China +1” Strategy

• Countries like Vietnam, Indonesia, and Malaysia are emerging as fast-growing pharmaceutical hubs, offering both affordability and rising regulatory standards.
• Regional collaboration is also expanding. Japan, South Korea, and U.S. companies are funding manufacturing ecosystems here as part of a broader diversification and de-risking strategy.

Technology as an Enabler of Friendshoring

As supply chains slowly spread out across trusted countries, another quieter and more complex challenge emerges, that is coordination and traceability. As a business you need to know what's happening at every step, across thousands of kilometers and multiple jurisdictions spread across the globe. More than that, you need to keep them aligned, on quality, timelines and accountability. 

That’s where technology is quietly doing the heavy lifting. Real-time traceability platforms are replacing outdated spreadsheets and siloed emails with live dashboards that track every material, every movement, and every quality checkpoint. With sensor integration, cloud-based dashboards, and automated alerts, these systems allow manufacturers, suppliers, and regulators to stay in sync. 

And inside the manufacturing plants themselves, things are changing too. Continuous manufacturing lines allow for leaner, cleaner production, tailored to smaller footprints ideal for new friendshoring hubs. Coupled with green chemistry, these setups not only reduce waste and energy use, but also help meet rising environmental expectations in host countries.

What This Means for the Future?

Friendshoring, in this sense, isn’t about pulling back from the world. It’s about rebalancing global partnerships to make them fairer, smarter, and more resilient. The future won’t be shaped by the cheapest provider but will be shaped by the most dependable partnerships, the most responsive systems, and the most ethical, environmentally sound practices. It’s a much-defined shift from short-term cost-cutting to long-term value creation, and it’s already underway.

Building a reliable supply chain starts with trust, transparency and science. At Scimplify, we’re on a mission to transform how specialty chemicals are sourced, developed, and delivered across key industries.

Through ATOMS, our proprietary digital platform, we connect buyers with an extensive network of over 200 manufacturing partners. From initial discovery to final delivery, customers gain access to over 3000+ chemical products offering real-time tracking, regulatory documentation, and quality data, all in one place, with just a few clicks.

Looking to streamline your chemical supply chain? Get in touch with at info@scimplify.com today!