Disruption in supply chains is not a new concept. Whilst multinational companies have turned to globalisation to enable rapid growth and expansion, the very nature of these expanded networks leaves them susceptible to external risks. Extreme weather, geo-political conflict and unexpected bottlenecks are just some of the factors that can impact the entire value chain at the click of a finger. Kapila Mehta, VP Sustainability, Power Products Global Business at Schneider Electric explains.
However, in recent years many companies have been looking to incorporate a more local approach into their strategies. A shift has been underway in supply chains to combat this disruption, with a growing emphasis on embracing a mix of global and local — a move to glocalisation.
As a result, many businesses are now recognising the value of going local, not only for the sake of transparency but also to enhance their sustainability efforts. So, how does a hybrid approach of global and local help to drive supply chain sustainability and resiliency? And how can we learn from each other to instil glocalisation best practices?
The shift to glocalisation
Transitioning from a global to a ‘glocal’ supply chain model can significantly contribute to sustainability and resiliency. During the pandemic, for example, businesses were forced to adapt quickly, find creative ways to build resilience into their supply chains, and take advantage of resources a little closer to home. This shift, commonly known as glocalisation, empowers companies to adapt their supply chains to suit the specific needs of local markets.
By tailoring products and services to meet regional demands, businesses can establish a deeper connection with customers and communities while minimising the environmental footprint associated with long-distance shipping. Although metrics suggest that we have made it through the worst stages of supply chain crises, the trend towards glocalisation and local supply chains is likely to continue. As companies seek to improve their agility, competitiveness, customer experience and global positioning, glocalisation will prove vital.
Why move to a glocal approach?
Embracing glocalisation and local supply chains offers numerous advantages for businesses. In an increasingly uncertain and dynamic global marketplace, companies can gain greater agility and flexibility through glocalisation, responding swiftly to individual market changes such as currency inflation and evolving customer preferences. A hybrid approach of global and local enables companies to safeguard against unpredictable shocks in the future.
With this hybrid approach, striking the right balance is key. Global supply chains are favourable as they provide economies of scale; on the other hand, local supply chains bring more resiliency. With a balance between the two, companies can remain competitive whilst become more resilient and adaptable to changing market conditions as well as ensuring a consistent flow of goods and services during challenging times like natural disasters, geo-political tensions, or product shortages.
Multi sourcing and onshoring play into this, with more local options being added to supply chain strategies to boost resilience. Through glocalisation, businesses can empower the local communities they reside in. By fostering strong ties with local suppliers and manufacturers, businesses can also contribute to the development of regional economies, generating more employment opportunities and nurturing a sense of community engagement.
Striving for supply chain glocalisation
The benefits of glocalisation are clear — but what does this look like in practice? Building a network of factory and distribution centres in different regions can help maximise flexibility, but businesses need to establish what outcomes they want to achieve, and understand the tools and resources they need to achieve this.
At Schneider Electric, global and local supply chains have helped foster resiliency and self-sufficiency in each region where the company operates. Our smart factory in Lexington, Kentucky, utilises smart manufacturing solutions to reduce energy cost and usage while improving operational efficiency.
As a result, it has driven a 26% energy reduction, a 78% CO2 reduction in conjunction with renewable energy credits (RECs), and a 20% water use reduction – all whilst reducing equipment downtime by 20%. This is just one of nearly 300 factories and logistics centres across 40 countries which uses Industrial Internet of Things (IIoT) solutions to create customised, sustainable and end-to-end connected supply chain.
During the pandemic and global shortages of parts such as semiconductors, it was vital to provide an agile response. Giving procurement teams the freedom to do whatever they needed to adapt quickly to changes in the market and continue meeting customers’ needs made supply chains more shock-resistant and customer-centred. Nurturing relationships with partners and suppliers are a crucial part of building resiliency and ensuring operational continuity. Moreover, the growing emphasis on Scope 3 will require larger organisations to build transparency across their supplier network.
While glocalisation is a core part of this process, it is also a big challenge. In some global supply chains, there are key suppliers in certain parts of the world who have the capabilities to share their emissions data and decarbonise operations. However, in other parts of the world that lack codes and regulations, tier 2 and tier 3 suppliers simply aren’t ready or able to report their emissions. Once more regulations around scope 3 are enforced, glocalisation will accelerate the path to decarbonisation.
As the trend towards glocalisation continues to gain traction, we can expect more businesses to realign their supply chain strategies in pursuit of sustainability and resiliency. By taking a more hybrid approach that combines global and local, companies can create a positive impact not only on their bottom line but also on the environment and the well-being of communities worldwide. Together, through this transformative shift, we can build a more sustainable and prosperous future for our interconnected world.
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