The success of a business, amongst other things, is largely dependent on their ability to supply their product or service to a customer exactly when and in what quantity they require. It is this ability that can be compromised by so many factors, the main one being supply chain management and accurate and reliable fulfilment of their own orders by suppliers. So, what is one way to gain greater control over the supply chain? Keep it simple, small and domestic. Here we will consider some of the benefits of a domestic or local supply chain.
Where a last-minute order or changes to an existing order may send a production manager into a tailspin, with a domestic supply chain, change can often be absorbed with no effect to the order or end customer. In short, the domestic supply chain has the capability of reacting quickly to changes and absorbing their effects so that business continues as usual. In large part, this ability to absorb change stems from their close geographical location and resultant uncomplicated supply chain. Time in shipment is reduced as is risk, and coordination of production and delivery is far more accurate.
Lose the middlemen, save the dollars
With the increase in globalisation and subsequent growth of individual supply chains, a massive business opportunity was created for companies proficient in logistics. In fact, it is estimated the US collectively spends $1 trillion per year simply on logistics. Therein lies the cost and time saving opportunity. By keeping suppliers close, supply chains are kept small negating the need for logistics companies and middlemen. This saves a great deal in time, money and risk of errors.
Community-minded and marketing yourself
Not only is sourcing domestically an environmentally and ethically-responsible choice, but it also appeals to those customers who have the same ideals driving their business. This then provides a point of difference that can be marketed and capitalised on. By procuring inventory stock or materials from local growers or suppliers, not only will fair prices be expected (in a developed nation with employment guidelines) but also, local business is supported which grows local economy and enhances development. And these are not the only wins. From an environmental perspective, the company’s carbon footprint can be dramatically reduced, which is not only fantastic for our lasting global impact but again is a marketable, point-of-difference, which is becoming a larger driver for consumers.
Finally, there is a key advantage in keeping supply local for you, as a business. Greater control of production and quality is achievable as you are able to visit the manufacturer and view your product as a work-in-progress. This face-to-face contact cannot be underestimated for ease of business transactions, comprehension and accurate fulfilment of orders. So many errors occur through demands being lost in translation, which only acts to lengthen production time and strain business relationships. It is imperative to treat all customers, whether local or international, the same however it is inevitable that if you are located down the road and could pop in at any time, that your business will be prioritised, quality will be maintained and all will be done with a polite greeting and a smile.
Ultimately, the decision whether to source product locally or internationally is completely yours and must be made once all decision criteria have been appropriately considered. The decision is effectively influenced by demand and the ability to supply this demand through different channels. Acquiring this knowledge and ascertaining your company’s needs is facilitated by inventory management software, which is designed to keep all these variables in coordination and control, something that is a welcome relief to most businesses.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.