August 30, 2016 / agility, best practices, Cost Management, industry news, LIT, Output, productivity, strategic planning, supplier relationships, value-added services
There is no question that the supply chain is evolving. As reported in a previously published blog, instead of treating supplier relationships as a series of business transactions, more and more manufacturers are treating their supply chain as a valuable part of their business strategy. In fact, this trend is listed as a best practice in the eBook, 5 Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization.
With an increased focus on building closer partnerships with suppliers, it’s not too surprising that many companies are starting to move back to sourcing suppliers closer to home. As one article from Automotive World quips, “local sourcing—it’s the new global sourcing.”
According to the AW article, local sourcing can bring cost savings across the entire supply chain, especially in light of rising costs in traditionally low-cost regions. “This phenomenon of local sourcing is being witnessed across the globe, with leading OEMs sourcing locally from developed as well as emerging countries,” the article states.
A report released by MFG.com, an online manufacturing marketplace, shows similar trends. Based on the data gathered from buyers of custom manufactured parts from the MFG Watch 2016 marketplace survey, 80% of U.S. sourcing professionals chose to source their parts predominantly in the U.S. The report also found that since 2012, buyers have seemingly moved away from sourcing from Chinese suppliers, as sourcing in China has fallen by about 14% in 3 years.
It is worth noting that the MFG.com report found that U.S. sourcing professionals nearly doubled their sourcing activities in regions like Eastern & Central Europe, as well as South America and North Africa. In other words, not everyone has jumped on the bandwagon.
However, there are definitely some benefits for ball and roller bearing manufacturers that choose local sourcing. Local suppliers, for example, can quickly and easily respond to any troubleshooting or maintenance problems with your tooling and equipment, often in-person. They can also assist with other key business areas, such as preventative maintenance and operator training.
Of course, those are just a few examples. An article from Thomasnet gives a more comprehensive list in its article, “Top 6 Benefits of Local Sourcing:”
- More Reactive. Local suppliers are typically more reactive than suppliers who are farther away. They are able to deliver products quicker, and it is much easier for a supplier to coordinate a shipment across the neighborhood than around the world.
- Greater Control. The further away you are from elements of your supply chain, the less control you have over them. There’s also less chance of things being “lost in translation,” which often occurs when working with far-flung teams of people, many of whom aren’t actually on the floor and touching your products.
- Reduced Supply Chain Costs. North American businesses send and receive parts and products all over the continent, and the expenses can add up as quickly as the miles. Localizing your supply chain can reduce many of these costs. And, with less money being sunk into logistics, there will be less weighing down your bottom line.
- Better for Business. Local sourcing doesn’t just help save money; it can also help you generate more of it. That’s because companies in your region may be impressed by your efforts to keep a tight and fast-paced supply chain, which can help you attract new customers.
- Good for the Community. It stands to reason that if sourcing locally increases your bottom line, it would do the same for other suppliers and manufacturers in your area, which can be a big boon to your local economy and the people who live there.
- Helps the Environment. Localizing your supply chain represents a tremendous opportunity to help the environment. When you reduce shipping and storage, you also reduce emissions and energy usage.
Whether building cars or manufacturing ball bearings, more and more operations managers are finding that their success is directly tied to collaborative vendor relationships—relationships that go far beyond the sale of a product. While not everyone believes in local sourcing, it is one of the many ways you can build closer, more valuable relationships with your supply chain.
To read more about building valuable supplier relationships, including some key areas where suppliers can help, check out the white paper, Managing Your Blade Manufacturer Relationship.