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.
8 benefits of the domestic supply chain
1. Absorb change
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.
2. 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.
3. 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.
4. Reputation and brand image
One of the biggest benefits of local sourcing is that it can improve your brand image.
While most other companies may outsource their resources, your company is giving back to the domestic economy and community by keeping things local.
For businesses just starting out, brand image is extremely important for attracting a solid customer base. This could be a great method for differentiating your brand and company from existing businesses.
5. Less supply chain stress
By sourcing domestically, you will be able to easily get in touch with suppliers and other key stakeholders. You will also be able to go to site in person and deal with any supply chain issues.
This way, if there are any disruptions along the supply chain you will be able to identify them quickly and resolve them efficiently.
Being able to do so is invaluable when it comes to keeping your customers informed and happy.
6. Faster delivery times
Of course, another fantastic benefit of domestic sourcing is that your customers will be able to get their products much faster than if you had to wait for them to arrive from overseas.
This is especially true in smaller countries like New Zealand, where local delivery times can be as short as 1-3 days.
One of the biggest things customers look for in purchasing goods is convenience, and fast delivery times certainly contributes to making the buying process easy and stress-free for the customer.
7. Environmentally friendly
Domestic sourcing will drastically reduce the amount of environmental waste you contribute to. When you reduce shipping and storage, you also reduce carbon emissions and energy usage.
This is just one more feature of local sourcing which will help you stand out among your competitors.
8. Keeping tabs
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.