Supply chains in the US have been widely stretched around the globe for decades. Outsourcing and offshoring manufacturing has been a gold standard in the industry until 2020. Then, the pandemic happened, accompanied by many other economic and political factors like the US-China trade war and Brexit. Considering these factors, the time has come to shorten the supply chains. Many retailers and businesses in the US are trying to develop a better local supply chain, use regional freight carriers, and take other steps to make their supply chain more flexible and prone to disruptions. Are the new times coming? Maybe. Regardless, it’s better to be prepared. Here are a few best practices for building a strong local supply chain to complement your shipping strategy.
What are the benefits of developing a local supply chain?
The cost has always been the greatest obstacle for businesses when considering developing or optimizing their local supply chains. Outsourcing and offshoring are common because remote areas offer much cheaper services and products. The increase in global consumer demand has driven remote suppliers to become more versatile and flexible in their service offerings. This made outsourcing more desirable than local supply chains.
Strengthening a local supply chain can provide many benefits and reduce costs if done right. A developed local supply chain fosters trusted relationships with suppliers, provides flexibility and an opportunity to negotiate the terms of your partnerships more successfully. But most importantly, this way you make your supply chain less vulnerable to disruptions and increase chances of on-time deliveries, while also helping local manufacturers’ community to grow their businesses.
3 best practices for a stronger local supply chain
Investigating the market
It is important to conduct thorough market research to figure out if there are any manufacturers in your area related to your business. Firstly, it would be insightful to look at what your local competitors are doing. Do they work with local suppliers and manufacturers? How successful are they with their efforts? At first sight, it might seem that a selection of suppliers in your area doesn’t provide solutions that directly meet your needs. However, this doesn’t necessarily mean they lack skills or expertise. Local manufacturers can turn out to be surprisingly flexible and open to discussing new services or solutions to offer.
Partnering with local suppliers
Establishing relationships with regional manufacturers unlocks many possibilities for business development and profit while presenting your business as a responsible company. With more businesses trying to strengthen their supply chains with local partners, there is an emerging tendency – merging. In the business world, it’s called insourcing and implies acquiring a manufacturer to become a part of your business. This warrants superior transparency and integrity. However, if you are not able to invest in developing your local suppliers, it’s still plenty of opportunities to build trusted and flexible relationships that will benefit both parties.
Using regional carriers
Apart from production, there is another vital part of any supply chain – transportation. Obviously, larger carriers are much more common than regional ones, but regional carriers can close the most challenging gaps across your supply chain, like last-mile deliveries. Additionally, having a diverse network of regional carriers ensures better expedited and overnight on-time delivery rates, as well as having personalized customer service.
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