Supply chain security: local vs global

Britain is the main source of imports for Ireland, making up more than 20 per cent in 2018 and 2019, despite uncertainty around the UK’s departure from the EU, according to the Central Statistics Office. A tumultuous year in 2020 that continues into 2021 means many Irish manufacturers are looking for ways to secure their supply chains by removing risk from their component supply. Andrew Barnes, area sales manager for Ireland at TFC, compares working with a local vs global supplier.

Ireland is a manufacturing powerhouse, with more than 32 per cent of its GDP accounted for by manufacturing, compared with the European average of 15 per cent, according to IDA Ireland. However, 2021 has already presented many challenges to Irish manufacturers’ supply chains. Shortages on supermarket shelves, factories waiting on materials and hold-ups at borders have put pressure on businesses to reconsider their approach to supply chain management. Naturally, worries about the supply chain are at the forefront of business leader’s minds — supply chain hurdles must be overcome for recovery to be successful.

COVID-19 highlighted the importance of the domestic supply chain, particularly for essential medical products like ventilators and personal protective equipment (PPE). Considering that Ireland is one of the largest exporters of medical products in Europe, with annual exports exceeding €12.6 billion, its importance cannot be downplayed — global health depends on Ireland’s access to technical components.

Considering your options

One key question to consider when turning to a new supplier is whether to look locally, or globally. There are clear advantages to working with a local supplier with feet on the ground, including local knowledge and the ability to form a close working relationship. On the other hand, you may miss out on the latest technology and the local supplier may not be able to negotiate a bulk-buying discount or meet the minimum order level in the way a global company could. Access to a global market can also help support rapid growth and drive continuous improvement.

When choosing a new partner for supply chain management, what it really comes down to is trust. The stakes are extremely high — stock availability can make or break a manufacturing business, because without a reliable supply of the required components, manufacturers face reputational damage and downtime. On the flipside, overstocking components due to a lack of confidence in their availability brings problems with cash flow and storage. 

The best of both worlds

To reap the rewards of both approaches, it might seem plausible to work with a local supplier for some components and a global one for others. However, working with multiple vendors introduces more paperwork — more invoicing, more admin and more work for procurement teams. These soft costs add up, creating a more time consuming, as well as more expensive approach.

One solution is vendor managed inventory (VMI), where a single supplier takes responsibility for the procurement and delivery of a broad range of components. VMI also means there is not always a need to choose between the two approaches; some supply chain businesses can think locally but act globally. TFC, for example, has a global network of suppliers that means it can procure and supply high-quality parts. The components are then supplied from domestic depots, minimising the risk of disruption.  

Due to growth in demand, we launched a facility in Portadown in 2020 to support customers across Northern Ireland and the Republic of Ireland. Our experienced, on-the-ground team have detailed knowledge of the Irish markets and are backed by implementation teams from different disciplines, who work together to achieve the best result. Importantly, we provide you with a single account manager, who will really get to understand your business and your expectations.

At TFC, we know there is no one size fits all approach to VMI. Our team takes the time to get to know you individually, looking at your unique requirements in terms of material flow, the type and number of parts needed, and building a solution accordingly.

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