For many FM buyers, pressure to reduce costs has led to a reliance on overseas suppliers, particularly in China. But as the perfect storm of Brexit, COVID-19, and geopolitical conflict continues to disrupt global supply chains, a growing number of businesses are reappraising their approach and looking to local networks for support.
In this article, we’ll outline four key benefits of supply chain localisation, exploring its impact on everything from communities to the environment.
- Supply chain localisation helps to ensure flexibility
When it comes to FM procurement, agility is key. However, a 2021 House of Commons briefing stated that global supply chain disruption had led to longer supplier delivery times, with the manufacturing and construction sectors hit particularly hard. And, in a recent blog post, KPMG warned that “disruptions to supply chain operations are set to stay in 2023”.
Local supply chains are often more responsive than global networks, meeting their customers’ changing needs quickly. In addition, without long journeys and potential customs delays to contend with, local suppliers can offer shorter lead times. This, in turn, helps their clients to avoid project delays and significant logistics costs, which have soared in the wake of the pandemic.
- Using local suppliers boosts local economies
Supply chain localisation has significant benefits for local economies, helping to create new jobs, develop a skilled workforce, and drive growth. Many FM businesses have made it the cornerstone of their Corporate Social Responsibility (CSR) strategy, striving to work with local SMEs wherever possible. It can also have national benefits, increasing tax revenues to HMRC.
- Localisation helps buyers to remain in control of the supply chain
By forging strong relationships with suppliers, FM businesses can stay on top of quality, costs, and availability. While managing partnerships with overseas manufacturers often proves challenging, local relationships are easier to maintain. Buyers can visit production facilities to review procedures, ensure that their suppliers are compliant, and work through supply challenges together. With buyers able to keep a close eye on supplier standards, localisation can also result in improved product quality and customer satisfaction.
While COVID drove the industry to adopt new, more flexible ways of working, these in-person relationships are still key to successful supply chain collaboration (link to collaboration blog post?)
- Supply chain localisation has environmental benefits
Sustainability is a priority for the FM industry, with many businesses striving to achieve net zero as part of their Environmental, Social and Governance (ESG) strategy. Supply chain localisation can help them to operate more sustainably, reducing shipping and storage, and the carbon emissions associated with these activities. Indeed, the Alan Turing Institute recently reported that the shipping industry is responsible for around 3% of global greenhouse gas emissions caused by humans.
You’ll need to invest time and effort in establishing a local supply network, and should start with a well-thought-out procurement strategy. In today’s tough economic climate, it might be worth engaging a specialist consultant to guide you through the process.
With experience of supporting both end clients and FM providers, SPG’s team is well-placed to assist. We help FM suppliers to achieve sustainable growth, reviewing their operations and simplifying the onboarding process. We can also connect buyers with a network of approved and compliant providers, enabling them to take a more localised approach. Think of us as the missing link in the FM supply chain.