CAREL reinvents supply chain with ‘Globally Local’ model amid trade turbulence

By Staff Report June 5, 2025 6:42 pm IST

Facing geopolitical shifts and trade uncertainties, Pietro Rossato shares that CAREL has adopted its supply chain strategy with a resilient “globally local” model, which blends regional manufacturing, mirrored technologies, and digital oversight for global consistency.

How is Carel adapting its global supply chain strategy to geopolitical shifts and trade uncertainties?
Historically, we have followed the principle of “local for local,” which means that, from a manufacturing and procurement standpoint, our investment strategy is to localise production as close to the customers as possible.

One consequence of our approach is that most of our factories operate as “multi-product” facilities, making the regions nearly autonomous and less vulnerable to local disruptions.

Our supply chain strategy reflects this: We focus on localising component sourcing as much as possible. This effort reduces inventory and lead times and facilitates the development of “second sources,” enhancing our resilience to disruption risks.

The next step in our strategy involves creating local supply chains tailored to the specific market needs of our products. This approach addresses the desire for “made in” labelling and helps mitigate the impact of import duties, representing a new frontier in our operations.

With a rising focus on localisation, how does Carel balance local manufacturing with its commitment to global standards?
Our primary approach is “local for local.” To maintain the ability to temporarily relocate production between sites, we also implement a principle known as “mirrored technologies.” This means the same product is manufactured in different plants using identical equipment and processes, ensuring technological overlap, redundancy, and resilience.

In recent years, we have invested in digitising our processes and enhancing the visibility of our industrial network. Currently, we can monitor the load on all 200 production lines across our 15 facilities worldwide.

This capability helps us prevent overload and effectively plan production transfers to meet our customers’ needs.

Has Carel explored or invested in emerging manufacturing hubs like India, Vietnam, or Mexico as alternatives to traditional bases like China? If yes, what influenced these decisions?
Our small facility in Mexico was established to serve both the North American and local markets.

In India, we have specific partnerships with local manufacturers for certain products aimed at the domestic market.

Generally, our “local for local” approach means that we do not plan to relocate production outside the sales region. However, this can be applicable within a region. For instance, we operate facilities in Italy, Croatia, Poland, and Germany in Europe. These factories produce multiple products and can take advantage of varying labour costs and logistics, or they may specialise in specific products due to recent mergers and acquisitions.

What role does Carel see international collaboration playing in driving innovation, especially in industries where no single nation can achieve self-sufficiency?
Open innovation is a great opportunity, mainly to speed up the adoption of new technologies, and this is particularly true in vertical applications.

The same is true for products with a short life that does not justify direct investments: the so-called “buy and sell” products that complete but do not differentiate our catalogue’s proposal. In this case, cooperation with other companies is key.

On the other hand, to prevent the risk of being copied and maintain our reputation as innovators, we must directly invest in solutions that bring more value to customers, strengthening competitiveness barriers. 

How important are borderless trade policies for Carel’s operations, and what regulatory changes could better facilitate seamless global OEM partnerships?
Recent trade policies force us to take the “local for local” approach, limiting our ability to leverage our global footprint and redundancy.

In some specific situations, massive import duties make investing and producing in those countries uncomfortable. 

Instead, an open market is the enabler of competitiveness and industrial development. This can speed up growth and value creation for our customers by allowing us to access the best and most convenient sources.

Rules are important in a global market to prevent unfair competition (such as commercial dumping) but should promote competition instead of creating barriers. 

What challenges does Carel face in aligning its products and processes with varied global regulatory standards, and how does it overcome them to ensure consistency?
Carel’s R&D department is spread worldwide, ensuring a prompt reaction to changes in local regulations.

If, on one side, our approach is to design products that can fit different applications in different regions, we can also deliver dedicated products, leveraging our global presence.

Regarding processes, our production has a limited impact on the environment, so we do not need to adopt specific approaches, and it’s quite easy to comply with local regulations.

In the context of ‘globally local’ manufacturing, how does Carel ensure customer expectations are met across diverse markets without compromising brand identity and quality?
As said, our products are manufactured using the same processes and technologies worldwide, which is a must for us: we supply global customers who expect to get the same products in any region.

All technological decisions are centralised to ensure that adopting digital solutions (from IOT to AI) allows us to control our processes in real-time to prevent deviations and quality issues.