Offshoring was one of the biggest business trends at the turn of the century but, by the time of the 2008/9 financial crisis, the gloss was already beginning to wear off. Concerns around jobs, quality and service levels, as well as financial interdependence, encouraged many businesses to review their options, and moves to ‘re-shore’ key services only accelerated in the wake of the Brexit referendum and COVID-19 pandemic, both of which exposed global supply chain vulnerabilities.
This trend towards developing more local supply chains is about building smarter, more-resilient supply chains that are less vulnerable to global geopolitical shocks. It’s an approach that can not only improve supply chain stability but also offers a range of benefits beyond the bottom line; from the economic boost of local job creation to stronger community and customer relationships and even environmental and procurement gains.
For example, local sourcing helps reduce Scope 3 emissions for organisations grappling with Net Zero commitments, which are often the largest part of a company’s carbon footprint. Shorter transport distances mean lower emissions, while greater supply chain visibility enables more accurate sustainability reporting. Similarly, as public procurement moves away from seeking the ‘most economically advantageous tender’ (MEAT), towards a focus on social value through ‘most advantageous tender’ (MAT), procurement teams are now able to score submissions that offer wider value to the local community more highly than those competing purely on price. This means that the environmental, economic, community and wellbeing impacts of using local supply chains can all positively impact on commercial success. Being known as a business that invests in local communities can also provide a competitive advantage when it comes to recruitment and retention, while quality control can also be improved as regular site visits and more-direct relationships with local suppliers create accountability that is harder to achieve with more-geographically-dispersed teams.
So, how can businesses go about building effective, resilient local supply chains?
Start by mapping out existing supply chains and then conducting honest capability assessments to understand where gaps exist, savings can be made, or additional support may be required in future. Once clear needs have been identified, the next step is to develop your knowledge of the market. Alongside desk research, industry and local networking events can be a great way to find out more about local suppliers and obtain first-hand recommendations. Specialist ‘meet the buyer’ events can offer a more-focussed, time-effective route to growing networks in a targeted way, identifying businesses you would like to work with while staying abreast of valuable, industry-specific procurement opportunities that could boost growth and shape future strategy.
Even in global marketplaces, local knowledge is king when it comes to developing long-term business relationships. Building local supply chains – whether around a business’ offices or the projects they are working on – is not about protectionism but creating businesses fit for an uncertain future, whose strong local roots mean they can predict and respond to changing market pressures effectively.