The Benefits of Local Sourcing: Mitigating Externalities (5/5)

In this post, we explore some of the externalities that occur when a company only sources and manufactures products globally. We will continue to reference and tie in our concept of circularity in our examination of some of these externalities.

The Hidden Costs of Global Supply Chains

While it is true that globally sourcing raw materials and manufacturing can sometimes lead to cheaper production costs, regional sourcing offers cost-saving advantages as well. This is in addition to the many advantages that won’t ever show up on a business’s balance sheet but are even more important when examining the long-term impact our businesses can have on the environment and our local communities.

When businesses attempt to save money in the short term, we often forget about the long-term costs to society overall. Many of the externalities we have observed with global supply chains negatively impact our local communities and the environment, often creating significantly higher costs down the road.

Saving Money with Local Sourcing

Sana Packaging’s supply chains exemplify how a small business can achieve real cost savings by utilizing predominantly regional supply chains while striving toward a circular economy.

Reducing Shipping and Storage Costs by Sourcing Locally

By structuring our supply chains with a focus on sustainability and regional sourcing whenever possible, we have been able to cut out some major expenses. Because most of our raw materials are sourced regionally, and all our products are manufactured regionally and shipped directly to customers, we have largely eliminated the need to pay for expensive warehousing.

Local Sourcing Benefits the Community

Beyond traditional cost savings, we believe global supply chains create significant negative externalities in the environment and local communities. When companies focus on attempting to mitigate the negative externalities associated with their supply chains, the cost-benefit occurs far beyond their bottom line.

Remembering the True Costs of Economic Globalization

It appears that in the rush to participate in the global economy and its perceived advantages, many business owners have missed crucial points:

- What is the actual impact these decisions have environmentally and within local communities?

- Is it worth saving money on raw materials if it means putting a local operator out of business?

- Is it worth saving money in the short-term if it requires exponentially higher costs to try to reduce the damage caused by increased greenhouse gas emissions in the long-term?

These are the kinds of questions that we ask ourselves every day at Sana Packaging – and we hope to inspire other businesses to begin asking themselves these questions too, as we look to build a better future.

The Positive Impacts of a Sustainable Circular Economy

The rise in awareness around sustainability has created a category of consumers who want to associate themselves with environmentally friendly businesses that are actively working to support their local communities.

Local Sourcing for Meaningful Business Relationships

We believe regional supply chains can have positive impacts on business relationships as well. We have seen how utilizing regional sources and regional manufacturing whenever possible can lead to new partnerships, create new business opportunities, and help craft a powerful brand image within local communities.

Local Supply Chains Strengthen Communities

Establishing local supply chains gives a business the ability to give back to its own community, which can have a positive impact far beyond the bottom line. We believe it is essential to build positive relationships with other businesses in the local community and that the benefits far outweigh any potential higher production costs. In this way, we can eventually transition from the traditional economic model to a circular one and help create the kind of lasting change that is necessary to create a truly sustainable economy.

Regional Sourcing Can Improve the World

We believe a regional model is the best way to mitigate the negative externalities that may save businesses money in the short term but will create many additional long-term costs socially, environmentally, and within local communities.

Circularity to Minimize Environmental Impact

By utilizing local sources and regional manufacturing as much as possible, we are not just attempting to save money. As a company, we are doing our best to keep resources circulating locally to help build up our communities and limit our environmental impact.

Sustainability and Circularity

That is also why we have chosen to manufacture our products from 100% plant-based hemp plastic, 100% reclaimed ocean-bound plastic, and other sustainable materials. These are not perfect solutions by any means, but there will always be limitations to any solution to a complex and multi-faceted issue. We also know that while we have made progress in striving towards circularity, we can do even better.

A Continued Effort Toward a Truly Circular Economy

In attempting to be industry leaders in the movement towards circularity, we will continue to push ourselves as a company and ask ourselves the same difficult questions we encourage other businesses to ask themselves.

Written by: Galen Kuney