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4 Reasons Why Businesses Should Choose Regional Supply Chains

Recent global crises exposed numerous headaches in overseas production, causing many businesses to re-evaluate where their raw materials originate from. Regional supply chains are critical to keeping operations and costs stable, all contributing to happy customers and a healthy bottom line. Read on to learn why your company should invest in regional supply chains to bring back local manufacturing companies.

Global Supply Chain Crises

Empty Shelves at a store

The COVID-19 pandemic unmasked many complications within global supply chains. Consumers at home generated a large demand for goods that were delayed by labor shortages and travel restrictions. In early 2020, the sudden demand of household goods revealed a dependence on materials from overseas. This caused shortages that forced many local businesses to pivot their operations to deliver much needed supplies.

In 2022, supply chains saw another major distribution challenge when Russia invaded Ukraine. Banned imports from Russia created raw material shortages and energy price hikes, forcing businesses to re-structure their supply chains.

Today, many businesses are still navigating labor shortages caused by a large baby boomer generation entering retirement, leaving gaps in workforces. Additionally, volatile energy costs and tariffs are further complicating the process to ship goods from overseas locations. These factors are motivating companies to shift their supply chains to a regional and local network of manufacturing suppliers.

Reasons to Invest in Regional Supply Chains

1. Avoid Overseas Mishaps

Man stocking shelves at a store

When the COVID-19 pandemic broke out, 70% of raw materials required to produce PPE was coming from China to the US. The world is unpredictable and when businesses outsource all manufacturing overseas, there is great vulnerability that is tied to that approach.

Pandemics, foreign conflicts or weather events can upend a business for days or weeks. In that time, businesses can lose millions in revenue because of delayed shipments and downtime. Large accounts may look elsewhere for their goods since they have deadlines to meet too.

By choosing local suppliers, a business can greatly reduce these risks. Lead times can improve, and business will be more resilient during unforeseen global events. There is no need to worry about international issues when your raw materials are sourced from a few towns away. Quality control issues are more easily solved locally rather than internationally.

2. Reduce Costs & Shipping Times

Tractor trailers at a warehouse

Shipping goods overseas is not as cost effective as it used to be. The FBX Global Container Freight Index is used to measure the average cost of global shipping goods. This index exploded from $1,300 per shipping container in February 2020 to $9,500 in mid-2022. The cost of labor, plus the rising cost of energy are driving up large bills for international importers.

Additionally, lead times are more erratic as ports deal with labor shortages. In 2021, mass quitting and retirements left ports shorthanded. Cargo ships were backed up and shipments were delayed by weeks.

Stop losing sleep over the large bills and inflated lead times caused by overseas shipments. Ground transportation is more affordable than air and sea. With fewer miles and borders to cross, tariffs can be avoided, and lead times will improve.

3. Ease Environmental Impact

Preserving the Environment

88% of consumers want to see the companies do more than make products and profit. This applies to making a difference in the world we live in. While you enjoy improved lead times and costs, your business will also assist in minimizing carbon footprint. This reduces dependence on sea or air travel, saving thousands of gallons on jet fuel and limiting emissions to shorter ground routes.

4. Stability & Growth in Local Economies

Supporting Local Businesses

Help grow local businesses, instead of foreign entities. For instance, the automotive and tech industries suffered when Taiwan’s suppliers shuttered in 2021. These companies had great dependence on suppliers in Taiwan. Once the crisis unfolded, they suddenly needed to find a new source.

Instead of relying on international suppliers, businesses should consider domestic manufacturers. Choosing regional suppliers helps local businesses grow, hire residents, give back to the community and contribute to infrastructure. A rising tide lifts all boats. Bring that rising tide to your community with regional manufacturing.

How Velcro Companies Supports Local Economies Through Regional Manufacturing

Happy Employee at Local Supplier

Don’t gamble on overseas suppliers that present nonstop risks. Investing in regional manufacturing provides stability, shorter lead times and a healthier planet. Velcro Companies has manufacturing facilities and offices strategically located on nearly every continent to optimize regional supply chains for companies worldwide.

Our local teams understand their markets and many products can be certified based on regional requirements including the Berry Amendment and OEKO-TEX® STANDARD 100*. Velcro Companies has local manufacturing and support to keep your business on track, wherever you are in the world. 

View our global manufacturing facilities and certifications.

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