Source Local: The Impact of Using Local Suppliers

local suppliers By now, you’ve heard a few hundred times that buying local is, as Martha would say, a good thing. But it’s not just for consumers to take heed. Businesses who seek out local suppliers can have an equally significant impact.

How, you ask, can we be so sure? Is this just another feel-good thing we tell each other, like ‘it’s the thought that counts’ or ‘you’re just as pretty as your sister’?

Well, for those of you who refuse to believe everything you read on the internet, we’re going to put on our glasses and talk numbers for a minute. An economic study was commissioned by Local First Arizona and carried out by Applied Economics to study SCF Arizona, a worker’s compensation insurance company, and their fiscal impact on the State of Arizona in 2009.

As it turns out, when local businesses stay in-state with their vendor purchases, the effects are staggeringly positive.

The Results

According to Applied Economics, “The findings of this analysis show that locally owned companies with a vested interest in the community, in fact, do create a greater economic impact, indirectly supporting more jobs, payroll and output locally.”

The study, which was released in 2010, looks at the overall impact to the state during 2009, and finds that the impact can be seen in a few outlets, most significantly in employee spending, claims payments made to local medical providers, and vender purchases.

In fact, 82 percent of SCF Arizona’s total vendor purchases were from in-state vendors, which is high even for a locally based company, according to the study. The study finds, “SCF’s local vendor purchases support an annual economic impact of $68.2 million statewide and support about 620 jobs at local vendors and their suppliers.”

Local Suppliers -- SCF Table copy

SCF Arizona Case Study

Source Local

Kimber Lanning, President of Local First Arizona, said the study was commissioned to show the impact one business could have when they make a commitment to utilizing local suppliers first.

“I can do studies all day long that show bad economic development, or show poor results for Arizona’s purchasing power. That would be really easy for me to do,” she said.

“But what we set out to do was to show what one company could do when they put their minds to it, in terms of good. As opposed to brow beating people who weren’t doing good, I’d rather show them what could be done and inspire them to do better.”

While Lanning says they were expecting some level of positive results, they were really surprised by amount of jobs created beyond primary employees through their choice to ‘source local.’

“They [SCF] employed 518 people, but they indirectly support 3,600 Arizona jobs. That number is much larger than I anticipated,” she said

After the study was complete, Local First AZ representatives hand-delivered it to over 200 large companies and institutions throughout the state, including energy provider APS, to show them what they could be doing to impact the local economy.

“Arizona consumers spend hundreds of millions of dollars, and if we just shifted small percentages, even ten percent of our spending, that could make a huge difference in Arizona’s economy.”

There is it folks, hard evidence that when local businesses support and purchase from other local businesses, everyone wins.

Ready to make the switch to local suppliers? The best way to meet other local businesses is through local associations!

Does your small business utilize local suppliers?

About the Author

April Atwood

April is a freelance writer who combines her marketing and writing experience with a love for supporting small businesses. She writes, bikes, and uses a coffee press, but not in the pretentious way.

Comments

  1. Crystalyn says

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    • Shannon Willoby says

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