How can we support aid agencies to buy locally manufactured goods?
*This post originally appeared in Makernet.global 11/15/17.
In our quest to catalyse more local manufacturing around the world, one of the topics we are passionate about is the need for international development and aid agencies to source more of their procurement from local manufacturers. Some of the key benefits of this are:
No shipping or customs: Local production shortens supply chains; shorter domestic supply chains reduce transport costs and eliminate international shipping and import duties. Even with a higher manufacturing cost per item, overall ‘landed cost’ can be lower.
Less warehousing: Because local producers supply goods as they’re needed, agencies buying locally need to spend far less on warehousing.
Less overhead: Each shortening of the supply chain can reduce costly overheads.
Context appropriate: Local design and production allows for items to be made to suit local conditions and context. Developing country markets are often stuck with products and solutions designed for use in rich countries – e.g. imported consumer goods from Asia and Europe aren’t generally made with African roads, electricity supply, and building conditions in mind.
Locally repairable: Imported goods are often difficult and expensive – or sometimes impossible - to repair locally. Locally produced goods can be built to allow locally repair and servicing with locally made replacement parts.
Economic impact: Sourcing products locally allows more money to stay in the local economy and can support the growth of the manufacturing sector, creating new businesses and jobs.
Environmental sustainability: since we are primarily moving data rather than physical items, there is lower environmental impact. In addition, there is far more possibility to use local materials, and to re-use materials (since the products will be used close to where they are made and so can more easily be recovered).
Shorter lead times: Buying locally can drastically shorten procurement lead times, as transport is greatly reduced, and customs are eliminated.
Higher stock availability: it is easier to manage stock of a few raw materials (wood, filament for 3D printing) than of a whole range of finished goods, so they can be in stock more of the time.
Many donors and aid agencies are moving strongly towards cash programming, giving money rather than products so that people can make their own decisions about what they need most urgently. This approach naturally fits well with local production of needed products – but everyone acknowledges that cash programming is not the answer in every situation. For the time being, there will continue to be vast quantities of aid budget being spent on products. We think that more of that money should be spent on products made by local manufacturers employing local people, because that is a route that leads towards communities becoming self-sufficient rather than dependent on aid handouts, as well as offering better supply for the recipients.
We at the MakerNet consortium are continuing our research into the barriers and challenges that stand in the way of aid agencies procuring from local manufacturers, and exploring some ideas that could potentially address some challenges or remove some barriers. With that in mind, we are now carrying out a series of structured interviews with professionals in procurement, logistics, finance, and IT functions of aid agencies. We have prepared some materials that include visual mock-ups of potential support systems based on three different concepts: mapping locations of local manufacturers (see also our previous blog post on mapping), offering sourcing options for specific products, and a distributed contracting and quality control engine. We will be conducting interviews over the next few months and will publish the results, as well as using them to inform our strategy going forwards.
If you have knowledge of aid agencies’ procurement processes, or know someone who does, we would love to hear from you! Please get in touch too if you are interested for any other reason in the ideas we are developing. Connect @ Makernet.global