Local Vs Global Sourcing

Local vs Global Sourcing

Most businesses will find it easier to source products or components locally because of the reduction in transport time and overall efficiency. However, this is not always feasible when trying to meet large scale orders for a cheap price, leading many to harness the global market for parts with the best value and profit. At Darian Global, we can help establish the best supply line for your business by comparing local and global sources to meet your business requirements. Here we will outline the pros and cons of each method to determine the most suitable, reliable and consistent sourcing strategy for you in the long term.

Positives of Local Sourcing

  • Local suppliers will have products that are cheaper to transport and a reduced delivery time, allowing goods to be received quickly under strict timescales.
  • Suppliers that are local will speak the same language, which improves the logistics and planning of deliveries to meet specific requirements.
  • Sourcing products locally is a great example of investment to the nearby community, which can improve the image of your business as you are contributing to the surrounding economy.
  • Collaborating with local suppliers helps form new connections in the nearby area, especially if you work well together and they recommend you to other nearby businesses.
  • You have the benefit of being able to meet your supplier more regularly and have face-to-face meetings, rather than taking long flights or speaking virtually over video calls or the phone.
  • A business that sources locally can travel to their suppliers to inspect the production and management of the company as reassurance. This provides a first-hand account of the supply line to ensure maximum reliability.

Negatives of Local Sourcing

  • If you are limited to sourcing products locally it can affect the fairness of the supplier selection process. This is because there might be a business further away that could provide better services at a cheaper price.
  • Any issues generated with local suppliers can affect your business image in the nearby community. This is especially the case if there is a local workforce, and a contract was terminated which affected jobs.
  • The highest quality components and products can’t always be found locally.
  • Any economic or political implications, such as driver and fuel shortages in the local area, will have detrimental effects on delivery times.
  • If your area is subject to natural disasters such as flooding or wildfires, this will further impact production and delivery times.

Positives of Global Sourcing

  • The global market has more options when it comes to change and innovation.
  • Enables a wider selection of products with a broader price range comparison.
  • It is easier to find unique and hard-to-find products.
  • Overseas suppliers are more open to working with smaller businesses with less recognition.
  • You can increase the scale of the supply chain by sourcing from multiple areas globally. This is especially the case for large orders where one supplier is not enough.
  • It provides access to resources, materials and skills that cannot be found domestically.
  • Sourcing from overseas leads to more opportunities in new markets which can help your country sell products abroad and learn from new experiences.
  • Overseas manufacturing costs tend to be significantly cheaper. Some key examples are China and India, which have an enormous workforce resulting in cheaper labour.

Negatives of Global Sourcing

  • There are different industry standards and regulations when compared to your home country. For example, certain products may need to be CE marked to comply with EU standards. To combat this, Darian source components that have internationally recognised standards and certificates, such as ISO 9001. This ensures that all products sourced from abroad meet the required quality standards.
  • Import and export tariffs and restrictions can make it harder to receive goods from certain countries. This is why Darian sources from countries that have preferential trade agreements with the UK, so no duties are paid on engineered components. Brexit has also made importing and exporting more complicated, which is why we arranged an ‘import customs clearance’ for our clients via our haulage company. This ensures supply lines remain consistent and secure, with no additional charges passed on.
  • Tax and currency exchange rates can affect the cost of goods and make items from certain countries more expensive. Despite this, the pound is currently strong against most currencies, meaning it actually offers Darian a cost advantage in most cases.
  • Differences in language and culture can make communication with foreign companies more complicated and drawn-out. This is why Darian have staff in the countries that speak the local language and understand any cultural differences, which are recognised and respected throughout our sourcing arrangements.

Levels of Global Sourcing

A global procurement strategy is split into five levels. These consist of;

Level 1: Domestic purchases only.
Level 2: International purchases made on an as-needed basis.
Level 3: Sourcing strategy that includes global purchasing.
Level 4: Centrally-coordinated purchasing across global locations.
Level 5: Global coordination and integration with other functional groups.

To help maximise your business performance and potential, you need to identify which level you are working at, then determine what level you want to reach or work towards.

Find the Source

At Darian Global, we understand how difficult it can be to find the best supplier to help your business flourish. We consider both local and global companies to help you source the cheapest products and components at the best quality. Our end goal is to help you partner with a reliable supplier that remains consistent to meet all your requirements and business needs.

For more information on local and global sourcing, contact Liz Samandi on +44 (0)1858 433096 or visit our contact page and our expert team will be happy to help.