Local Supply Chains: Why and How to Promote

Due to the disruptions to the globalized supply chains in recent years, a growing movement to bring back local supply chains has been sweeping across the globe, especially in the West.

 

As the world becomes more connected, it is easy to ignore the value of supporting local supply chains and their influence on a community.

 

Introduction

By the turn of the 21st century, the world was becoming increasingly interconnected. However, with this turn of events, Businesses and Governments began overlooking the importance of localized supply chains.

Today these same parties have become disillusioned with the grandiose and shiny promises global supply chains offer. Instead, they have been inundated with its fragility, which has guaranteed the comeback of the local supply chain.

The key reason behind the comeback of local supply chains is centred around revitalizing economies and ensuring sustainable growth after the decimation we saw during the pandemic and the current Russia-Ukraine War.

 

So Why did local supply chains dry up in the first place?

 

Global supply chains are the engine of the modern economy, granting businesses access to low-cost resources and labour, which they have milked for decades. But all these came at a cost…

As global supply chain networks grew, they sucked the life out of local supply chains and businesses. They whittled without a chance to compete, resulting in many businesses losing jobs and the economic decline of countries.

 

What is prompting the resurgence of local supply chains?

There are a few reasons why local supply chains are resurging, especially post-pandemic and in the middle of one of the most important wars of the 21st century.

1. Supply chain resilience: This may well be the primary driver of the resurgence of local supply chains. Disruptions from the pandemic, wars, and trade wars have exposed the vulnerabilities of most global networks.

2. Supply chain agility: The modern economy is ever-changing. However, with closer proximity to their suppliers, businesses and their supply chains can respond better and faster to changing market demands.

3. Quality control and compliance: It is one thing to train and communicate your needs to a supplier but getting their compliance? Well, that is a whole other matter. Organizations can now closely monitor their suppliers by localizing their supply chain to ensure quality products and compliance with business standards.

4. Support local economies: With economies taking such a beating, governments across the globe are creating incentives for multinational corporations to localize their supply chains and contribute to the economic success of their nations.

 

Ok, but what is the importance of local supply chains in all these?

As mentioned earlier, the recent supply chain crisis decimated many economies across the globe, leaving many of them at risk of collapse, but the local supply chains offer a solution.

1. They offer resilience by reducing dependencies on foreign vendors, eliminating most of the risk of disruptions.
2. They help countries build a more sustainable economy through job creation and industrialization boost.
3. Localized supply chains can promote environmental sustainability by reducing the carbon emissions associated with long-distance travel.
4. Proximity to suppliers enhances better collaboration with suppliers and positively impacts the quality of products.
5. Local supply chains also foster a sense of community and connection by emphasizing the faces and stories behind the products they purchase.

 

 

How to promote local supply chains in Africa?

We already discussed the benefits or essential role the localization of the supply chain plays. However, promoting a local business is a multi-faceted approach. Here are some strategies to support the growth of local supply chains.

 

1. Raising Awareness and Education

Raise consumer knowledge about the benefits of supporting local businesses and the influence their decisions have on the community and the environment. Encourage consumers to make educated decisions and prioritize goods made locally.

 

2. Networking and Collaboration 

Encourage collaboration among local firms, manufacturers, and retailers to create a robust and integrated local supply chain. Create platforms and networks that facilitate stakeholder dialogue and cooperation.

 

3. Government Assistance

Governments play a vital role in promoting local businesses through policies and incentives. This involves investing in infrastructure, providing tax advantages or subsidies to local enterprises, and enacting policies that encourage local sourcing and production.

 

4. Consumer Awareness

Educate customers on the importance of supporting local companies and their good influence on the community. This can be accomplished through marketing campaigns, school teaching programs, and community events emphasizing the value of purchasing locally.

Challenges Faced by Local Supply Chains

While local supply chains offer many advantages for businesses and communities, they also face challenges that must be overcome. Some of them are: 

1. The gap in price between locally produced goods and mass-produced products from global supply chains. 

2. Lack of Infrastructure and support for local suppliers, especially because they do not have access to the same resources and network as larger or global businesses.

3. Businesses, especially multinationals or international organizations, are already used to a standard that local suppliers might struggle to maintain.

4. Huge investment is required to set up the local supply chain. This is prevalent in countries like the United States, where companies leave because of the cost of doing business within the country.

Conclusion

As the world becomes more linked, it is vital to recognize the value of supporting local supply chains and developing resilience. 

The weaknesses of global supply networks and the need for a more localized strategy have been highlighted in recent years. Communities may jump on this wagon to create jobs, decrease environmental impact, and develop a feeling of community and connection by regenerating local economies.