Global Supply Chains Going Local

Written By: SPS Chauhan

Insourcing vs. Outsourcing GraphicMost of us are familiar with the phrase: “think globally, act locally.” Though it might be popularly thought of in terms of food sourcing, the manufacturing industry is also adopting a local mindset. A recent survey by EEF, the manufacturers’ organization, found that 40% of U.K. companies are bringing production back in-house, while 25% have increased their use of local suppliers, with factors ranging from the recession to the disruption(s) caused by natural disasters such as the Japanese earthquake last year.

Bringing It Back Home

Evidently, for a significant portion of the respondents to the EEF survey, reshoring operations and using local supply chains are significant components of their risk mitigation plans. EEF chief economist Lee Hopley stated: “Supply chains have become increasingly globalized for manufacturers. This brings a range of benefits, but there are risks attached when things go wrong. In recent years, manufacturers have been hit by a host of unforeseen events, which has seriously tested their supply chain monitoring and business continuity planning.”

U.K. businesses aren’t the only ones going local. The U.S. firm Caterpillar—the leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives—has more than 2,000 suppliers in its home state of Illinois. Caterpillar chooses to seek out local sources in each of its territories, realizing benefits such as the ability to respond quickly with product changes and services, while spending less on transportation and energy.

According to the EEF survey, local sourcing benefits also include:

  • Better supply chain relationships
  • Improved inventory management
  • Greater supply chain visibility
  • Decreased costs and increased customer satisfaction

In an effort to reduce costs to our customers and enhance processes, the Bastian team often investigates the benefits of sourcing materials locally or from nearby regions. For example, during a project in India, Bastian altered the architecture of a controls panel and saved nearly 40%, a savings benefit that was passed on to the customer.

Reducing costs and risk is a top priority for logistics and supply chain professionals. By striking a balance between global and local, supply chain managers have an opportunity to enhance their operations in a variety of ways, with one of the benefits being decreased risk. And by using the right tools, manufacturers can improve warehouse processes and achieve their goals in the marketplace.

I am the Director of Business Development for Bastian India. I have vast experience in supply chain management consultancy, specifically in the field of warehousing and automation.

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