Companies increasingly want to produce closer to their end markets to secure against procurement risks. Growing geopolitical tensions, the pandemic crisis, and financial and dependency risks have led OEMs to look for alternatives.
Is manufacturing locally the right solution for your company?
Here are 5 reasons we’re seeing more companies reshape their manufacturing strategy closer to their end market.
- Improving the supply chain
- Corporate Social Responsibility gains
- Reduced costs
- Better customer experience
- Regional economic growth
1. Improving the supply chain
Producing goods close to the end market creates supply chain ecosystems that are healthier, more secure, and better serve both company and customers. The food industry is a good example: a shorter, local chain is easier to guarantee in terms of quality and minimal procurement risks because of short expiration dates and more easily managed quality control systems, among others.
As well as shortening the supply chain, creating localized ecosystems around your customers is greener! It reduces the carbon footprint of everything you manufacture, and avoids pollution by minimizing or eliminating container use.
2. Corporate Social Responsibility gains
Producing locally helps companies boost their Corporate Social Responsibility (CSR) profile and meet their CSR obligations and objectives. A shorter supply chain lowers their carbon footprint and boosts the local economy.
3. Reduced costs
While producing locally can feel more expensive than, or equal to, international production, Total Cost of Ownership (TCO) can be lower when considering the project as a whole.
You can make significant savings at various points in the supply chain when you relocate production closer to your end market — all contributing to your TCO. Once calculated to include hidden costs such as lead times, quality control processes, all the trips you have to take to visit your supplier, and so on, local production can turn out to be an effective option.
4. Better customer experience
Producing closer to the end market helps establish stronger local socio-economic connections. This can lead to a better customer experience overall. For example, customer follow-ups can more easily be conducted in the local language, with an understanding of cultural contexts that make engaging with your company truly delightful. That’s over and above the reduced lead times on product delivery and returns.
5. Regional economic growth
Local production contributes to the regional economy. According to an article in scientific journal Impact Assessment, manufacturing facilities have both direct and indirect impacts on their nearby communities. Direct positive effects include job creation and tax payments, while secondary effects include the increase in support trades.
Curious to learn more? The Asteelflash team are experienced at serving an international portfolio of clients and their end markets, from 17 fully fitted locations across the globe. Contact us and let’s discuss how local production could benefit your company, or click the button below to get a quote and find out how affordable it can be.