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Localizing the supply chain

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Localizing the supply chain

  • Posted by: SLA Admin Logistics

The call for a greater supply chain resilience emerged when the pandemic exposed the lack of visibility many firms had into their offshore suppliers and manufacturers. This has forced many businesses to consider moving pieces of their supply chain locally —for example Canadian companies localizing supply chain activities in North America. Following are the benefits of localizing a supply chain, highlighting the major considerations to take into account, barriers and the steps a business should take if it decides to onshore. As per the industry business leaders, COVID-19 outbreak will have a lasting impact on their supply chain. The day this pandemic gets finally over, one cannot expect business as usual.

The primary focus of supply chain professionals has been on reducing cost and prioritizing profitability which has driven the increase in globalization of supply chains and, for many manufacturers, a major dependence on China and other low-cost territories. Businesses are gauging between global and local supply chains as lots of businesses have been disrupted if not crippled very quickly by restrictions and delays on international movement of raw materials and components. The heritage of innovation and adaptability in UK is going strong, giving more businesses confidence in considering a supply chain localization strategy.

Localization of supply chains will increase manufacturing costs, impacting consumer prices to increase. However, they will offer some far-reaching benefits, for instance – more employment opportunities and increase in tax revenues for HMRC. This will be much needed as we come out of the pandemic crisis. Manufacturers will have tighter control over supplier standards – which will lead to better quality of production and elevate customer satisfaction.

Amidst the pandemic chaos lot of companies have been finding ways to reduce their carbon footprint. Localization could work in favour to this mission, as the goods and components will have shorter distances to travel. Shifting the balance away from globalization could well provide security, environmental benefits, improvement in job prospects, growth in skills and increased resilience in times of global uncertainty. Businesses need to make good use of networks and seek out opportunities for collaborations with more local suppliers. One thing is for sure, now more than ever supply chains need to adapt to survive.

Author: SLA Admin Logistics
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