Local Supply Gaining Favor in Sustainable Supply Chain Management

image: supply chain“The best procurement organizations look for new ways to capture maximum cost savings. Don’t stick with the status quo; as the external environment changes, so should your strategy.” –Procurement Strategy Council

Following this guidance, the Strategic Sourceror post, Supply Chain Impacted as Businesses Question Outsourcing Strategies, offers insight into the shifting global supply chain trends.  Recognizing the business sustainability value of localized supply, more companies are seeking to bring strategic supply chains closer to their home operations.

“Many manufacturers underestimated the offshore impacts of long lead times and high inventory costs.  They are now discovering that maintaining service levels, in addition to the inventory and logistics buffering costs necessary to support the long-distance supply chain, far outweigh any labor cost advantages.  In addition to higher than anticipated overall product costs, offshore production also introduces a latency lag in bringing new products to market and responding to market trends."  - David Johnston, senior vice president, supply chain, of JDA Software

Today’s increasingly positive economic outlook is escalating consumer demand, and many supply chains are simply unable to keep up.  Combine this demand surge with increases in transportation costs, and our sustainability consulting finds companies reevaluating the sustainability of ‘global’ supply.

Our sustainability consulting has witnessed a growing focus on sustainable supply chain management over the past few years, which has proven to be a huge business improvement opportunity for many businesses.  With traditional procurement strategies primarily focused on cost savings through activities such as outsourcing and off-shoring, a shifting business sustainability mindset is elevating sustainable supply chain thinking.  Our sustainability consulting prescribes a healthy mix of integrated localized supply relationships  to mitigate the many bumps along the road in the pursuit of business sustainability.

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