Consumer landscapes are continuing to change while businesses are adjusting for the new normal. Manufacturers and industrial companies across the world are working hard to maintain and strengthen their supply chains. Companies who preferred to source internationally to save on costs, are seeking other cost-effective solutions.
The growing reality is that procurement professionals would prefer to source locally. It's a strategy that has contributed to many manufacturers' business continuity during the COVID-19 pandemic when other business' supply chains were disrupted.
According to our surveys conducted by Thomasnet.com,
- As of April this year, 64% of manufacturers indicate they are "likely to extremely likely" to reshore in future
- 72 percent of industrial/B2B buyers "always or generally" prefer to source locally
- In comparison, just 10.8 percent of respondents "always or generally" prefer to source globally
- In fact, nearly half of buyers (46.7 percent) actually "rarely or never" prefer to source globally at all
It's clear that most buyers prefer to keep the supply chain as close to home as possible. Here’s why:
1. More Flexibility
You never know when an opportunity will strike or a challenge will arise. Buyers prefer knowing what the growth pattern is for the product they are sourcing before they actually choose a partner — and ability to scale is key. For instance, you can receive a highly lucrative bid from a great customer, or an existing client may need you to ramp up to meet demand. Will you be ready?
If you source locally, the answer will probably be yes. That’s because local suppliers are typically more reactive than suppliers who are farther away. They can deliver products quicker, and it is much easier for a supplier to coordinate a shipment across the neighborhood than around the world. (Interested in seeing what buyers are looking for today? Check out our Sourcing Activity Snapshot.)
2. Greater Control
The further away you are from elements of your supply chain, the less control you have over them. Suppliers may say that they treat all of their customers and purchase orders the same, but if they anticipate a site visit or a drop-in meeting from you, chances are they will keep you top of mind.
Face-to-face visits will allow you to address any concerns and ensure all products meet your standards. There’s also less chance of things getting “lost in translation,” which often occurs when working with big teams of people, many of whom aren’t actually on the floor and touching your products.
Today, more manufacturers use videos of their factory to connect with more customers when travel is difficult or has restrictions. Learn more about Thomas' free video production services here.
3. Reduced Supply Chain Costs
If you're tightening your budget, you should consider tightening your supply chain as well. The amount of money companies spend on logistics every year is staggering, with North American companies shelling out over $1 billion every year.
North American businesses send and receive parts and products all over the continent and the expenses can add up as quickly as the miles. Even then, these pieces have to be stored in warehouses until they are shipped again to the next supplier or, if you’re lucky, the customer.
Many of these costs can be reduced by localizing your supply chain. And, with less money being sunk into logistics, there will be less weighing down your bottom line.
4. More Revenue
Local sourcing doesn’t just help save money; it can also help you generate more of it. That’s because companies in your region may be impressed by your efforts to keep a tight and fast-paced supply chain, which can help you attract new customers.
Integrate your commitment to local sourcing into your marketing and selling efforts. In fact, consider integrating it into your unique selling proposition.
5. Good For The Community
It stands to reason that if sourcing locally increases your bottom line, it would do the same for other suppliers and manufacturers in your area, which can be a big boon to your local economy and the people who live there.
Happy, well-paid employees are more likely to invest in local businesses. Additionally, respected and well-off businesses are in a position to contribute to communities through fundraising, volunteering, benefits, and sponsored activities.
6. It Helps The Environment
Localizing your supply chain represents a tremendous opportunity to help the environment. When you reduce shipping and storage, you also reduce emissions and energy usage. Sourcing locally not only contributes to green manufacturing, but ultimately helps you build consumer confidence. When consumers buy with confidence, the business benefits from increasing positive brand awareness and customer loyalty.
Today, more consumers than ever before (especially millennials) have been driving the food and beverage industry by purchasing items that have "clean labels" and explain the origin of their products. It's important that food and beverage companies that are manufacturing products more sustainably are using marketing to effectively showcase those efforts and provide a direct-to-consumer experience online.
7. Ability To Launch Products Faster
Manufacturers who source locally benefit from working with companies in the same time zone, which leads to easier and speedy communication. You can resolve problems faster and launch products to meet consumer demands and spikes.
Consumer demands are reaching new highs for businesses to increase their transparency around ethical supply chain and corporate social responsibility. Now is the time for manufacturers to closely examine their third-party vendor risks and supply chain. A recent industry report shows that planned North American industrial projected activity during May showed a strong rise in month-to-month activity after a subdued March and April. Find suppliers near you today to strengthen your supply chain or list yours for free and get found by more buyers online.
Editor's Note: If you're sourcing suppliers for COVID-19 items, click here for those manufacturers and distributors.
Additional resources for suppliers looking for new partners:
- 6 Strategies To Help Overcome Supply Chain Disruption
- 12 Sourcing Tips To Identify New Suppliers
- 8 Ways Thomas Can Help Your Supercharge Your Industrial Sourcing
- 3 Ways To Prepare Your Business For A Post-COVID-19 Trade Rebound
- Top 4 U.S. Manufacturing Challenges (And How To Overcome Them)
Did you find this useful?