Companies must rethink their supply chain strategies in the face of enormous global challenges. In reaction to these processes, deglobalization has emerged as a valuable tool to protect supply sources and boost resilience. In this blog post, we discuss deglobalization, its benefits, its obstacles, and how procurement technology software might help.
Understanding Deglobalization
Deglobalization involves localising purchases and reducing dependence on global supply networks. Its supply chain strategy balances global and local sourcing for resilience and adaptability.
Advantages of Deglobalization
Deglobalization is a purposeful strategy with many benefits, not only a response to problems. Some important advantages:
- Localising supply chains helps local economies flourish and create jobs.
- Matching ESG and CSR Goals: Businesses are increasingly concerned with ESG and CSR. Deglobalization addresses these goals by reducing carbon emissions and improving social responsibility.
- Enhancing Agility: Local suppliers are more flexible and responsive, helping companies adjust quickly to market changes.
- Proximity improves supplier collaboration, trust, and mutual benefit.
- Localised supply networks improve supply and budget forecasts, decreasing uncertainty and disruptions.
- Local networks offer partners for rapid capacity development and crisis supply sources.
Difficulties With Deglobalization
The advantages of deglobalization are not without their downsides. To localise anything, one must change their mindset, put a lot of money into it, and have access to the right tools. When you don’t have the proper equipment, transitions can get difficult.
Procurement Tech as Solution
Procurement technology software solves deglobalization problems:
- Spend analytics solutions enable risk-averse, intelligent purchase decisions. They help companies understand spending habits and find the best localization opportunities.
- Tail Spend Management for Cost Savings: Tail spend management systems identify indirect spend cost-saving options. They identify inefficiencies and optimise localised supply chain spending.
- Offsetting Costs with eSourcing: eSourcing solutions help mitigate expenses when switching to local or regional suppliers. They reduce supplier risk by facilitating discovery, negotiations, and onboarding.
- Leveraging Local personnel Resources: Outsourced local personnel can enhance capacity, negotiate supplier pricing, and find alternate supply sources. The expertise needed for localization is provided.
Maximum Benefits, Partial Localization
Supply chain localization may not be possible for all companies. However, partial localization has clear and tangible benefits. Organisations can boost resilience and competitiveness by balancing global and local sourcing.
Strategically, deglobalization is necessary. The benefits include supporting local economies, aligning with ESG and CSR goals, improved agility, vendor engagement, forecasting, and rapid capacity development.
Organisations need procurement technology tools to handle deglobalization. These systems give them spend analytics, tail expenditure management, eSourcing, and local personnel resources, making the transfer easier.
