Is buying locally really incompatible with competitiveness? Is it possible to prioritise local suppliers without driving up costs? Faced with pressures on supply chains and new environmental expectations, however, businesses must rethink their procurement strategies. After all, buying locally helps secure supplies and paves the way for sustainable performance, often in line with a corporate social responsibility (CSR) approach. So, how can these objectives be reconciled whilst keeping costs under control? An analysis by Bénédicte Serradeil, an expert in CSR support and corporate decarbonisation.
The globalisation of supply chains has long enabled companies to optimise their procurement costs. Manufacturing far away, buying at the best price and maximising volumes had become almost second nature. But a succession of crises has reshuffled the deck. The Covid-19 pandemic, geopolitical tensions, rising sea freight costs, raw material shortages and energy instability have highlighted the fragility of certain ultra-globalised procurement strategies.
In this context, the relocation of procurement is no longer seen merely as a matter of corporate image or regional commitment. It is becoming a the challenge of economic resilience, risk management and sustainable performance. Yet many businesses are still reluctant to take the plunge. The main obstacle? The widespread belief that «local» necessarily means «more expensive».
The reality is more nuanced. Whilst the unit price of a local product may sometimes be higher, the overall cost of a purchase is never limited to the price quoted on a quotation. Lead times, quality, the risk of stock-outs, logistics costs, stock levels, non-conformities, carbon footprint and strategic dependence are now all part of the equation.
Relocating without paying more therefore means adopting a different perspective. It is not a question of abandoning economic logic, but of broadening it.
Buying locally, reshoring… what exactly are we talking about?
The relocation of procurement may take various forms. Contrary to popular belief, this does not necessarily mean bringing all production back to France overnight.
Some companies opt for a complete relocation when they identify a critical risk within a strategic procurement group. Others favour a partial relocation by gradually rebalancing their supply sources between international suppliers and local players. A third approach is gaining significant ground: the multi-location. The aim, therefore, is to diversify sourcing areas in order to limit dependencies.
This approach varies considerably by sector.
In the agri-food sector, reshoring often relies on regional sourcing, in order to safeguard agricultural supply chains and meet consumer expectations. In industry, some companies are seeking to bring the manufacture of critical components closer to home in order to minimise lead times and stock-outs. The textile sector is also seeing the emergence of more local production strategies to improve responsiveness and reduce stock levels.
The movement also affects the indirect procurement. Many companies are now re-evaluating their service provision, supplies and event-related purchases from the perspective of geographical proximity and local impact.
The aim is therefore not merely patriotic or environmental. It is also operational.
Why is buying locally becoming a strategic priority?
For a long time, globalised supply chains seemed to offer an optimal balance between costs and availability. However, recent crises have revealed hidden costs that can sometimes be considerable.
The supply chain disruptions observed since 2020 have had a significant impact on businesses: production stoppages, delivery delays, rising raw material prices and soaring logistics costs. Some organisations have discovered, as a result, their dependence on a very limited number of suppliers, some of whom are located several thousand kilometres away.
Recent tensions in the Strait of Hormuz pointed out that a localised geopolitical event can have repercussions far beyond the energy sector. Companies reliant on imports have had to cope with longer lead times, uncertainty over deliveries and additional logistical costs, which have in some cases affected their production.
In addition to this, there are growing regulatory and environmental challenges. Requirements relating to corporate social responsibility, the duty of care and the reduction of carbon emissions are prompting procurement departments to gain better control over their value chains.
Economic sovereignty is also becoming a strategic issue in several key sectors: healthcare, electronics, energy and defence.
In this context, having suppliers located nearby is an increasingly sought-after way of ensuring security.
What are the barriers to the growth of local shopping?
Despite these findings, resiting remains a complex process.
The first hurdle, of course, remains the apparent cost. Local suppliers sometimes charge higher prices than competitors based in areas with low labour costs. This difference may seem difficult to reconcile with traditional cost-cutting objectives.
But that is not the only obstacle.
Some companies are struggling to to identify suppliers capable of meeting the required volumes or technical specifications. Furthermore, producing locally means finding suppliers capable of covering the entire value chain.
Example 1:
1,083, which manufactures its jeans in France, regularly highlights the difficulty of finding sufficient manufacturing capacity to meet demand and the need to gradually rebuild local supply chains.
Example 2:
France is assembling more and more bicycles on its own territory, but remains heavily reliant on components imported from Asia (drivetrains, brakes, batteries, motors). Manufacturers such as Moustache Bikes and Cycleurope France explain that reshoring is being held back by the lack of European suppliers capable of producing certain components in sufficient quantities.
In certain industrial sectors, specialist skills have gradually disappeared from the region. The local production capacity may also be inadequate.
For example:
In the 1980s, nearly 80 % of active pharmaceutical ingredients were produced in Europe. Today, a large proportion comes from China or India. The Covid-19 crisis has highlighted France’s heavy reliance on these countries: when supply chains were disrupted, pharmaceutical companies and hospitals faced supply shortages. However, relocalisation faces a major obstacle: the loss of expertise and industrial capacity. The project to relocate paracetamol production, led by Sanofi, Upsa and Seqens, has therefore required several years of investment. This is the price of rebuilding a French industrial sector.
The question of certifications is another challenge. Procurement departments often have to work within the framework of stringent quality requirements, regulatory constraints or international standards, which limit the pool of potential suppliers.
In addition to this, there is sometimes a cultural challenge. For years, procurement policies have been structured around bulk purchasing and the search for the most competitive price. Changing this approach means revising performance indicators and decision-making criteria.
Buyers then find themselves faced with complex arbitration cases.
Should we accept a higher price to secure our supplies? How can we justify a change in strategy to the finance department? To what extent should we prioritise local sourcing without compromising our competitiveness?
These issues are now at the heart of the discussions amongst procurement professionals.
How can you convince your finance department?
1/ Quantifying the cost of past stock-outs
2/ Measuring actual logistics costs
3/ Compare the scenarios in terms of TCO
4/ Develop different scenarios based on these options:
- continuation of the current sourcing arrangements
- complete relocation
- partial relocation
- dual local/international sourcing
5/ Highlighting ESG and CSR benefits
6/ Start with a pilot project focusing on a critical procurement category
Can buying locally really be more competitive?
Contrary to popular belief, a ‘buy local’ strategy can generate measurable economic benefits.
It all depends on how the company calculates its costs.
The unit purchase price represents only part of the actual cost of a product or service. An approach that total cost of ownership – often referred to as TCO – enables other factors to be taken into account: transport, storage, risk management, quality issues, lead times, administrative costs or environmental impact.
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However, when it comes to these matters, local suppliers often have significant advantages.
Shorter lead times make it possible, for example, to to reduce safety stock and improve flexibility. Better communication with suppliers also helps to minimise certain quality issues or technical misunderstandings.
geographical proximity It also facilitates audits, site visits and co-development initiatives. This leads to more frequent and responsive communication, which in turn facilitates the development of new products, process improvements and the search for innovative solutions.
For example: an industrial buyer based in Brittany needs to visit a supplier to resolve a quality issue or work on a product development. It is easy to organise a half-day visit to a supplier located in the Pays de la Loire region. On the other hand, visiting a supplier several thousand kilometres away requires more complex planning and involves several days’ travel.
This is an often-overlooked benefit of reshoring: it not only brings logistics flows closer together, but also brings skills, teams and innovation capabilities closer together.
Some companies are also seeing a reduction in hidden costs associated with supply disruptions. A slightly more expensive delivery may be economically justified if it prevents a production stoppage or a delay for the customer.
The benefits are not just financial.
A policy of buying locally also helps to strengthen the company’s links with the local community, support local employment and reduce the carbon footprint associated with transport.
These factors are now playing an increasingly important role in calls for tenderthe ESG criteria and thebrand image.
[Key figures]
According to several industry studies, one hour of production downtime can cost:
- between €10,000 and €50,000 in an industrial SME
- several hundred thousand euros in the automotive or aerospace sectors
In the food sector, transport accounts for an average of 6 % of a product’s carbon footprint.
Ways to relocate without driving up costs
Relocating procurement cannot be done on the spur of the moment. Successful companies generally adopt a a step-by-step, structured approach.
First stage : mapping one’s spending and addictions
Not all procurement categories present the same challenges. Certain critical categories warrant enhanced security measures, whilst others can continue to follow international models.
This analysis helps to identify risks of dependency, logistical vulnerabilities and the areas most exposed to market fluctuations.
Stage two : thinking in terms of total cost rather than face value
This shift often requires a rethinking of procurement metrics. Gains are no longer measured solely in terms of the price negotiated, but also in terms of business continuity, quality, lead times and risk reduction.
Stage three : adapt the specifications
Certain technical or administrative requirements may unnecessarily exclude local suppliers who are, in fact, competent. Without compromising on quality standards, it is sometimes possible to simplify certain criteria or to develop skills-building programmes in collaboration with partners.
Another key factor: long-term partnership
Indeed, reshoring often requires adopting a cooperative approach rather than one of constant competition. Local suppliers may need visibility in order to invest, recruit or develop their capabilities. Several support schemes are now in place: regional networks, industrial clusters, local sourcing platforms and public funding for industrial transition.
And what about you?
Please answer the following questions with ‘Yes’ or ‘No’:
| Have you identified the most critical purchase categories for your business? | Yes | No |
| Do you analyse your purchases in terms of total cost? | ||
| Are you already working with at least one local supplier in a strategic procurement category? | ||
| Have you assessed the environmental impact of your main supply chains? | ||
| Is the procurement department trained in responsible procurement? |
Results:
- 0 to 1 Yes: the re-sourcing of procurement is still not very much integrated into your strategy.
- 2 to 3 Yes: you have started the process, but there are still several avenues to explore.
- 4 to 5 Yes: your organisation is already committed to a more resilient and responsible approach to procurement.
Need to take it a step further?
The relocation of procurement cannot be improvised. Mastering tools for analysing total costs, incorporating CSR criteria and managing responsible procurement strategies are all key skills for balancing performance and sustainability.
[Training]
Incorporating social, environmental and ethical criteria into procurement decisions helps to reduce risks, drive innovation with suppliers and strengthen brand reputation. Do you want to improve your organisation’s overall performance through responsible procurement? Find out more about the training programme Responsible purchasing: reconciling purchasing performance and CSR issues.
Shifting sourcing strategies is not about pitting economic performance against local sourcing, but about building more resilient, agile and sustainable supply chains. By focusing on overall costs rather than unit prices, businesses can safeguard their operations without necessarily increasing their expenditure. What if, in the future, buying locally were to become one of the key drivers of competitiveness for the most successful companies?
