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Local sourcing strategy

Dive into the pros and cons of sourcing locally

Pros of sourcing locally

It’s important to remember that each organisation is different, so a local sourcing strategy may not be suitable for everyone. However, if you are thinking of sourcing locally, look at some of the advantages it has.

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Good for PR, demonstrating investment in the local community

Sourcing your products and materials from local manufacturers and suppliers will give a huge boost to the local economy. Today, consumers want to know where their goods are coming from and increasingly, want to buy locally. This can improve your organisations reputation as you are using local suppliers and manufacturers, which helps to improve the local community.

Easier to travel to suppliers for development, management, and site inspection purposes

If your suppliers are far away, it can prove difficult to monitor them. Sourcing locally helps to continuously monitor your supplier’s performance with regular site visits and a chance to meet them ‘face to face.’ This helps to improve supplier relationship and improve transparency across the whole supply chain.

Easier to satisfy local preferences and source specialised products

If you require a specialist product, it can be much easier to source locally. Having your supplier or manufacturer locally can help to facilitate visits to their site where you can explain requirements and important information face to face.

Shorter supply chains and therefore greater predictability of delivery times and lower costs

Local sourcing allows your organisation to be more agile. With shifts in market demand, sourcing locally can help you to keep up demand as there are shorter lead times. Sourcing locally significantly reduces transport costs. Oil prices fluctuate which means it can be harder to keep a handle on your transport costs and overall spending. Getting your products and materials you need for your organisation locally, will help to reduce transport costs and less money being used for logistics. Local sourcing helps to reduce supply chain risks as supply chains are often shorter.
- Lead time are often shorter, meaning any urgent requests can be dealt with quickly
- Sourcing locally helps to avoid exchange rate risks, meaning you’ll be certain of the actual price to be paid.

Sustainability

Sourcing locally can help drive down environmental issues such as our carbon footprint. When opting to source locally, it helps to reduce our carbon footprint as we are no longer reliant on goods manufactured and shipped from abroad.

 

Cons of sourcing locally

Take a look at some of the disadvantages of sourcing locally which you should consider before adopting a local sourcing strategy within your organisation.

  • Core products, raw materials or specialist skills may not be located locally to your organisation.
  • Labour costs may be higher in your local region.
  • Close supplier/staff connections can lead to issues with ethical supplier selection
  • Undesirable local publicity can arise when contracts need to be terminated: If you no longer want to renew a contract with the local supplier, this could cause bad PR for your organisation.
  • Possible resistance to change: If you once sourced your goods globally and are now opting for a local sourcing approach, business practices change. This could lead to a resistance in change and staff not being on board with the decision.
  • Supplier may be dependent on you: It can often be difficult for the supplier to do business with a competitor, making them heavily reliant on your organisation’s business.
  • Policy issues around encouraging competition and positive discrimination of local suppliers
  • Limited choice: With an increasingly competitive market, sourcing locally means you are limited on choice, which could come at a price. Sourcing globally helps to reduce costs where you are sourcing from a country that has increased manufacturing capacity or lower labour costs.
 

Sourcing strategy

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Sourcing key themes

Sourcing Strategy Strategic sourcing Strategic sourcing benefits Direct sourcing
Direct sourcing strategy Local sourcing Ethical sourcing Ethical sourcing strategy
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