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Businesses of all types and sizes regularly look for ways to optimize their supply chain. Whether it’s decreasing the number of suppliers (often international), increasing order sizes, or consolidating shipments – there are myriad ways for companies to cut marginal costs in operations and procurement. This pursuit of profitability has left many organizations open to major risks. The effects of COVID-19 led to port closures, capacity shortages, and inabilities to fill critical open roles in almost every sector. This has led to the supply scarcity and inflation that we’re currently facing and provided a shock of reality for many leaders: traditional supply chains aren’t as strong as we thinkp>
The supply chain wake-up call
The world may be opening back up, but many businesses, especially small businesses, are still grappling with ongoing supply shortages and are looking to identify alternative suppliers. Leaders are reassessing cost-down strategies in favor of striking a balance between savings and reliability. In their search for stability, some leaders are searching closer to home for local suppliers who may have been previously passed over.
According to a recent McKinsey survey, 90% of supply-chain executives stated that they expect to pursue some degree of regionalization during the next three years. The University of Wyoming is implementing a new system to accomplish just that. They’ve recently created an online database to connect local suppliers with each other to strengthen the local manufacturing supply chain. While this is just one example, it underscores the benefits of local suppliers partnering with each other.
Benefits to purchasing from local suppliers
Some leaders worry that working with smaller suppliers might cost more due to their lack of scaled buying power, however any potential price increases can be offset by a variety of benefits. Partnering with small, diverse, and local businesses offers five advantages to leaders looking to build supply chain resiliency
How you can help your local partners
We have seen some of the benefits organizations can derive through purchasing from diverse, local businesses. There are various ways that you can help your local small and diverse businesses thrive through:
Next time you start thinking about ways to build a stronger supply chain, remember that part of the answer might be right down the street. Building relationships with these sellers now can help safeguard against future supply chain disruption while supporting small and diverse businesses within your community.