Supply Chains, The 100-Mile Economy, & SME Benefits

What is the 100-mile economy in relation to supply chains, how adapting to sourcing from local vendors can and will benefit your local SME, and more specifically what it looks like for the Canadian entrepreneur?

Background to the 100-Mile Economy

Global supply chain disruptions have created tidal waves across industries, costing Canadian small and medium businesses millions. No one has been immune to the effects of geopolitical conflict, tariffs, levies, data protection regulations, and challenges in sourcing raw materials - not to mention the lingering aftereffects of Covid-19 restrictions. Reports from SMEs in retail, life sciences, construction, and more show that up to nine out of ten companies report lost revenue and other issues because of supply chain disruptions. 

Though 92 percent of executives say they want more visibility in their supply chains, only 27 percent are confident they have the knowledge and tools to achieve it. This gap offers an important opportunity to create category disruption through supply chain innovation and renewal.  

Innovators across industries are confronting global supply chain uncertainty by evaluating their global versus local supply chain operations to “future-proof” for a smoother and more predictable customer experience. For many, this means partially or totally adapting their entire supply chain from global to local suppliers, often within a 100-mile radius. 

What Is a Local Supply Chain in Canada?

A local supply chain can take different forms. But, at its core, it’s a supply chain that sources, produces and transports its inventory from businesses within its region or community. The idea of a 100-mile economy was inspired by the best-selling book The 100-Mile Diet: A Year of Local Eating by Alisa Smith. The book speaks to the need to be physically close to those providing your materials to create a more prosperous and sustainable economic infrastructure, both internally and throughout your immediate community.

While any supply chain that begins and ends within one's own geographic locale may be considered local, there are many different variations, models and philosophies behind the 100-Mile Economy that SME stakeholders can consider to find a solution that fits their specific business needs.

• Micro-supply chains
  A micro-supply chain is an operating model that can easily support a 100-Mile Economy. It focuses on designing “mini operating models” tailored to each customer segment’s needs. This agile approach depends on collaborative communication between clients and suppliers to create flexible chains close to the point of purchase. These finite, decentralized supply “pods” let businesses serve different value needs like speed, service, quality and cost depending on the client. Creating a custom micro-supply chain is a proven way to help small and medium businesses react quickly to disruptions.

• Circular supply chain
  A circular supply chain takes the idea of a 100-Mile Economy and amplifies its potential to one of minimal environmental waste. Circular supply chains are an extension of the green and sustainable supply chain concept and are “restorative and regenerative by design”. They differ from a traditional linear supply chain that takes raw materials, processes them into goods, and then discards the product. A circular supply chain “clos[es] the cycles” of each stage to extend the use of products and materials, minimize waste and maximize flexibility at all stages.

The Benefits of a 100-Mile economy

Maximizing your supply chain's potential by adapting to local sourcing will benefit your business in a number of ways. 

• Increased profits
  Local sourcing can help you save money. It can also create more revenue if you pivot your new supply chain resources into a unique selling proposition. Consumers are increasingly prioritizing local and sustainable sourcing as a major deciding factor in their spending and expect companies to be transparent about their processes. Integrating your commitment to a localized supply chain into your branding can amplify customer acquisition opportunities and solidify loyalty.

• Sustainability
  Any locally sourced supply chain has the potential to capture environmental sustainability, which is a valuable, potentially revenue-generating goal for any SME. However, the 100-Mile Economy also creates sustainability of a different sort; Investing in your community has been shown to create inroads allowing for future self-sustaining growth and prosperity.

First Steps to Adapting a Localized Supply Chain

• Stay flexible
  Small and medium businesses may not always have access to the same sophisticated supply chain options as multinational or large-sized businesses. But they do have an essential advantage thanks to their size. The flexibility to adapt supply chain sourcing, materials substitution, and pricing standards to account for supply change disruptions can create an impressive competitive edge. Lean into the possibility of change with testing and experimentation to design a custom supply chain that fits your specific needs.

• Map out your supply chain journey
  There’s no one size fits all model for localizing supply chains. To find the process that works best for you, start with some internal research to lay the groundwork for future adoption. Begin by physically mapping out your customer journey to evaluate the value steps in your supply chain. A value chain lets you know what points in your chain are working well and what points have little or no value, and are creating waste, either in time, revenue, efficiency, product materials or otherwise. Learning about any inefficiencies in your supply chain will guide your next steps.

• Adopt digital solutions
  An excellent way to track these questions and plot out a future value map is through supply chain optimizing software and other digital applications. Small and medium business owners have a number of accessible options to choose from. Symbotic, for example, has developed a “revolutionary” robotics-based AI system for fully-automated, end-to-end supply chain optimization, while Coupa offers a cloud-based platform “fueled by optimized supply chain models” to maximize value through each step of the process.

Future-proofing Your Supply Chain

Companies that learn to manage supply chains through evaluation, digital organization and/or redesigning their process to fit a local, micro, circular or similar network have the opportunity to amplify metrics from revenue to branding and customer satisfaction, all while reinvesting in their community. According to the McKinsey Global Institute, a global supply chain disruption shorter than even 30 days can jeopardize 3 to 5 percent of a small or medium business’s profitability ratio margin. Looking at the possibility of moving toward a 100-Mile Economy approach for your business could offer valuable protection against inevitable future supply chain disruptions.

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