Local procurement: A need intensified by Covid-19, but at what cost?

local procurement
February 9th, 2021
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The health crisis has clearly disrupted companies, especially their supply chains. At the heart of this issue, procurement departments have played a central role in continuing business operations and protecting employees by procuring the necessary supplies. At a time when securing supplies and reducing costs are top priorities for procurement departments, local procurement is an essential part of the discussion. But how can we build a resilient supply chain, help to relocate it and support national or European expertise? And at what cost?

The paradox of local procurement

Covid-19 highlighted the strong dependency on Asian countries for supplies when their factories and transportation were halted. The need to relocate purchases, at least partially, has naturally emerged as a result. Whether it's down to a fleeting emotional reaction or a genuine realisation, it's clear that companies are rethinking how they work.

However, procurement departments often get caught in a double bind between economic performance and corporate social responsibility. In the past, low-cost countries were prioritised in order to increase profitability by volume. However, the idea of price is now taking on another dimension, and companies understand that behind local procurement lies a virtuous cycle: securing supplies, reducing environmental impact, faster time to market, expanding the market, creating a selling point for the end user and so on.

As with TCO (total cost of ownership), which includes, for example, the purchase price, the cost of ownership, maintenance or even insufficient quality, perhaps procurement departments will take into account a product's "true" price, including the carbon cost of transportation and its contribution to the local economic ecosystem. A TCO approach like this, coupled with a sustainable procurement strategy, will surely be the key to future success.

Engaging the network is vital

To make local procurement a reality and to succeed in transforming this idea of price, all stakeholders must work together. Professional networks, sectors and public procurement must create the framework for this central approach.

Companies and communities must therefore strengthen relationships with their French suppliers and be open to new, innovative, local suppliers by building real partnerships and even by creating business transfer plans.

Making local procurement the norm relies on this collective dynamic (company managers, buyers, suppliers, investors, public authorities and communities). The key is building a responsible, sustainable, reliable, agile and responsive supply chain.