Local Sourcing: Improving the Automotive Supply Chain Through Locally Sourced Components

How Local Sourcing Benefits Automotive Procurement and Supply Chain

If your supply chain is inefficient, has long lead times and is challenged, then you are putting your product delivery dates at risk.

To have better control over your supply chain and to reduce lead times and short notice changes. You can use local sourcing whenever it is a cost-effective option.

Because a company is close does not make them the best choice. When all things are equal, cost, quality, dependability and they are also close that makes working with a local company a slam dunk!

If you’d like to learn more about how to find and use local companies to optimize your supply chain, please continue reading.

Local Sourcing Suppliers to Reduce Cost

Finding a company you can use for local sourcing of your products components or raw materials is a great way to reduce cost and risk.

Outsourcing from across the border can add cost beyond what the price per piece quoted. A multitude of administrative fees, regulations, and legal considerations. Considerations like the current exchange rate, taxes, shipping cost, and fuel surcharges.

Then there can be a lawyers fee, import brokerage cost and if any travel is required, then, of course, travel cost.

Improve Speed to Market with Locally Sourced Components

The shortened supply chain improves the speed, but it does not end with a shorter distance.

Customs on both ends of the supply chain can delay shipments. If there is a misunderstanding due to a difference in the language, you may end up having to start over to get the right part.

If there is a quality issue or defect in the part or component, even if the vendor ships a replacement it is adding at least a few weeks to delivery.

Quality issues can, of course, delay your ability to deliver products to your customer which can cost your company money and taint your reputation.

Material Sourcing Locally or Globally

When you are trying to determine where material sourcing should be. You should consider the level of service and responsiveness you need for our company to meet its objectives.

In every instance, the advantages of a local supplier should be a part of the conversation. Service, responsiveness, logistics, quality, and supplier relationships are all advantages a local supplier can offer.

These advantages are real because usually there is no language barrier, no difference in time zone or long-distance travel.

You can count on the local suppliers because they will be able to understand the forecast, volume commitments, and technical specs. They can do this with more accuracy and fewer issues with interpretation.

Some global suppliers will speak your native language, but even at that, there will be differences with some words and what they mean locally.

The Benefits of Local Sourcing

Some global companies are suitable suppliers and do offer excellent service and responsiveness for some items.

There are a lot of reasons why a local supplier can meet your supply chain needs more, here are six of them:

Local Suppliers are Flexible

Staying flexible and being able to react to your customer’s needs is what keeps our business thriving. Local suppliers can keep pace with what your needs are to ramp up on a new product or product extension your best customer wants.

Sourcing Materials Locally Gives You Greater Control

Companies drop in on their suppliers all the time, and it’s pretty hard to “pop” in on a supplier if they’re in China. Locally sourced material suppliers you don’t need to give them much notification before you are standing on their shop floor.

That regular face time keeps you on the top of their list because they know that you care and so should they. Face time allows you to bring up concerns, visit that part of the process and understand how it works and how they can address your concerns.

Reduce Supply Chain Cost with Local Sourced Materials

Budgets are under constant review because every company wants to lower cost and have more capital to invest back into their business.

When you have a local supplier, you can reduce the amount spent on warehousing and increase turns, from a shorter supply chain and lead time.

The more miles an item has to travel the more it cost to bring it to your location, affecting the cost.

Local Means More Revenue

Other companies who are potential customers will appreciate your ability to react and respond. They’ll notice your efficient and fast-paced supply chain, your commitment to the local community and businesses.

The more other businesses notice and recognize that your company is reactive and able to respond to changes the more they will want to do business with you. Getting that kind of attention will lead to more revenue and cash flow in your company.

Environmentally Friendly

Locally sourcing your supplies, especially for an automotive supply chain or similar, is much better for the environment. Fewer miles to travel for delivery means using less fuel and emissions to get it to your location.

Local Sourcing Means Building Real Partnerships

Building a partnership through local sourcing not only improves your companies image but increases opportunities for business.

Local companies also have a sense of the market in the region they serve and can help you expect customer needs and trends. Of course, you will want to make yourself known as more than someone who places orders with them, but as a real trusted partner.

Do you have any projects or designing needs that local companies can be a part of to improve quality and innovation?

Setting up your MOQ’s to help them run better and improve your speed to market. You want to show that the value you have as a partner goes beyond monetary value.

If you are in automotive procurement operations, or something similar, and need to improve your supply chain. If you are facing challenges to make those improvements, we may be able to help.

Partnering with manufacturers no matter the size can help you develop, implement and improve a less than efficient supply chain.

If you are looking for a local company to get started and want to know how you can change your current strategy, contact us today and we’ll show you how.

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