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Einkaufslexikon
Localization: Strategic procurement through regional supplier selection
November 20, 2025
Localization refers to the strategic orientation of procurement towards regional or local suppliers and markets. This procurement strategy is becoming increasingly important as companies want to make their supply chains more resilient while reducing transportation costs. Find out below what localization involves, what methods are available, and how current trends are affecting regional procurement.
Key facts
- Localization reduces transportation costs and CO2 emissions through shorter delivery routes
- Regional suppliers enable faster response times and more flexible adjustments
- Local procurement strengthens security of supply and reduces geopolitical risks
- Cultural and linguistic proximity makes communication and collaboration easier
- Localization supports sustainable procurement strategies and corporate social responsibility
Inhalt
Definition: Localization
Localization in purchasing involves the systematic transfer of procurement activities to regional or local markets and suppliers.
Key aspects of localization
Die localization is based on several strategic elements that enable successful implementation:
- Geographical proximity to production sites or sales markets
- Development of regional supplier networks and partnerships
- Adapting to local market conditions and regulations
- integration of cultural and linguistic conditions
Localization vs. global sourcing
In contrast to Global Sourcing Localization focuses on opening up regional procurement markets. While global procurement often offers cost benefits from international suppliers, localization focuses on flexibility, sustainability and risk minimization.
Importance of Localization in Procurement
modernism Procurement strategies integrate localization as an important building block for resilient supply chains. The regional orientation supports both operational efficiency and strategic sustainability goals.
Localization methods and procedures
The successful implementation of localization strategies requires structured methods and a systematic approach.
Market analysis and supplier evaluation
A well-founded market analysis forms the basis for successful localization. Regional supplier markets are systematically recorded and evaluated:
- Identification of potential local suppliers
- Assessment of capacities and quality standards
- Analysis of cost structures and pricing
- Review of certifications and compliance requirements
Phased implementation
Localization is typically carried out in several phases to minimize risks and take advantage of learning effects. Pilot projects with selected Material groups enable regional procurement approaches to be tested.
Supplier development and integration
Local suppliers often need support in developing their capabilities. Targeted development programs and close cooperation promote the qualification of regional partners and create long-term partnerships.
Key Localization KPIs
Measuring the success of localization strategies requires specific indicators that reflect both operational and strategic aspects.
Localization level and regional distribution
The share of local suppliers in the total procurement volume shows the progress of the localization strategy. This key figure is typically used after Material groups and differentiates geographical regions:
- Local procurement share as a percentage of total volume
- Number of active regional suppliers
- Average distance to suppliers
Cost efficiency and savings
The economic impact of localization is measured by various cost indicators. In addition to direct material costs, transport, storage and transaction costs are also included in the valuation.
Delivery performance and flexibility
Regional suppliers often offer advantages in terms of delivery times and flexibility. Appropriate KPIs measure the operational performance and responsiveness of local Security of supply.
Localization risk factors and controls
Localization strategies entail specific risks that must be minimized through appropriate control mechanisms.
Limited supplier base and capacity
Regional markets often offer a limited selection of suppliers, which can lead to dependencies and capacity bottlenecks. Dual sourcing and systematic supplier development reduce these risks:
- Development of redundant supplier structures
- Continuous market monitoring and development
- Flexible capacity arrangements
Quality and compliance risks
Local suppliers may not meet all required quality and compliance standards. Structured Aptitude tests and continuous monitoring ensure compliance with requirements.
Higher procurement costs
Regional procurement can lead to higher cost prices if local suppliers do not achieve the economies of scale of global suppliers. However, a holistic total cost of ownership analysis also takes into account savings in transportation and warehousing.
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practical example
An automotive manufacturer implements a localization strategy for electronic components. Through systematic market analysis The company identifies regional suppliers within 200 kilometers of production sites. The gradual transfer of 30% of procurement volume to local suppliers reduces transport costs by 15% and shortens delivery times from an average of 14 to 5 days.
- Development of a regional supplier pool with 12 qualified partners
- Implementation of digital ordering processes for just-in-time deliveries
- Establishing regular quality audits and development programs
Current developments and effects
Current market developments are increasing the trend towards localization and creating new opportunities for regional procurement strategies.
Digitalization and AI support
Modern technologies are revolutionizing localization through improved transparency and efficiency. AI in purchasing enables the automated analysis of regional markets and the identification of suitable local suppliers:
- Automated supplier search and evaluation
- Predictive analytics for market developments
- Optimizing regional procurement routes
Sustainability and ESG requirements
Increasing sustainability requirements are promoting localization as a tool for CO2 reduction. that Supply chain law is also strengthening the focus on transparent and responsible regional procurement.
Reshoring and nearshoring movements
Reshoring and nearshoring support localization strategies by relocating production capacities. This development creates new opportunities for regional supplier partnerships.
conclusion
Localization is becoming a central pillar of modern procurement strategies that combines sustainability, flexibility, and risk minimization. The systematic development of regional supplier markets enables companies to make their supply chains more resilient and at the same time increase operational efficiency. However, successful localization requires a structured approach, continuous market analysis and targeted supplier development. In an increasingly volatile global economy, regional procurement provides an important building block for sustainable and competitive companies.
FAQ
What is localization in purchasing?
Localization refers to the strategic orientation of procurement towards regional or local suppliers and markets. The aim is to achieve advantages in terms of costs, flexibility and sustainability through geographical proximity. The strategy includes the systematic development of regional supplier networks and adaptation to local market conditions.
What are the benefits of a localization strategy?
Localization reduces transportation costs and CO2 emissions, shortens delivery times and increases flexibility when demand changes. In addition, it strengthens supply security by reducing dependence on global supply chains and supports sustainable procurement goals. The cultural and linguistic proximity also makes communication with suppliers easier.
How do you measure the success of localization measures?
Success is measured by various KPIs, including the share of local suppliers in total procurement volume, cost savings in transportation and warehousing, and improvements in delivery times and reliability. Other important indicators include the average distance to suppliers and the number of active regional partners.
What risks should be considered when localizing?
Key risks include a limited supplier base, potential capacity bottlenecks, and higher cost prices compared to global providers. Quality and compliance standards from local suppliers may vary. These risks can be minimized through systematic supplier development, dual-sourcing strategies and continuous market monitoring.
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