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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
Local procurement
programme drivers
Benefits
Questions to consider
Cost reduction/
increased quality
• Reliability of supply,
reducing risks and
lead times on delivery
(particularly for remote
locations).
• Increased ease in
design and production
changes.
• Improved capacity for
quality oversight and
for innovation and
service improvements
through easier
interaction between
internal service users
and suppliers.
• Promotes
diversification of
suppliers.
• How can local
procurement decrease
cost and increase
quality?
• Is there evidence of
growing cost, disruption
or risk associated with a
reliance on international
suppliers?
Business
continuity
(logistics and
efficiencies)
• Proximity to suppliers
reduces delivery time.
• Proximity also means
ease in collaboration.
• Are there areas in the
supply chain that are
losing efficiency?
Long-term
economic
diversification
• A local procurement
process helps build
a diversified local
economic base which
can be self-sustaining.
• Is economic
diversification a stated
goal of the development
of the region of operation/
host countries?
• Is economic
diversification an element
of the company’s closure
guidance or plans?
5.7.1.3 Define the Type of Local Enterprises Being Targeted
In this phase, supply management practitioners identify the type of enterprises
to be targeted by providing a clear definition of the word ‘local’. At first sight it
may be defined in terms of geographical distance, but the issue is not quite that
simple. For instance, a supplier who is located next door to the organisation
is clearly local but there is still a need to specify the distance that should be
considered when defining a local supplier. It is therefore important to properly
define a local supplier so that the local procurement programme may be given
an appropriate focus and to enable the organisation to manage the expectations
of its various stakeholders. In defining ‘local’, the following criteria may be useful: