The SCM thesis Global to Hyperlocal: Lessons on Building Supply Chains in Your Own Backyard was authored by Jorge Requena and supervised by Dr. Inma Borella (inma@mit.edu). For more information on this research, please contact the thesis supervisor.

In recent years, global supply chains have been put to the test like never before. From the shockwaves of the COVID-19 pandemic to sudden shifts in trade policies, companies have learned just how fragile global networks can be. When products travel thousands of miles, small supply chain disruptions can cause major delays, shortages, and incur unnecessary costs. A single port closure or shipping delay can have a ripple effect across the world. These vulnerabilities have left businesses scrambling to find more reliable ways to get products to customers. As a result, many are turning their attention closer to home. By building supply chains that are local or even hyperlocal, companies can reduce risk, respond faster to changes, and strengthen their ties to the communities they serve.

Finding where to start: Going local isn’t easy

Transitioning to local supply chains is far from straightforward. Looking at companies operating at different points in the supply chain—from sourcing ingredients to post-consumer recycling—it becomes clear that the journey to local is filled with challenges. Companies often face high upfront costs when setting up local operations, whether that means establishing new supplier relationships or investing in new locations. Finding reliable local suppliers who can consistently deliver the right quality and quantity is another common obstacle. On top of these practical concerns, shifting to a local model requires a cultural change within organizations, demanding buy-in from procurement, logistics, and leadership teams alike.

Fast-casual restaurant Chipotle sources ingredients within 350 miles of its distribution centers, while retailer Walmart is establishing smaller, local fulfillment centers in densely populated areas closer to its customers. The startup Relocalize adopted a different approach, installing ice-producing micro-factories at grocery distribution centers to eliminate middle-mile transportation and reduce emissions by 90%. These examples highlight that there is no one-size-fits-all solution; rather, each company must find the approach that best fits their industry, scale, and resources.

Charting a path forward: Practical tools for local supply chain success

Drawing from the experiences of nine diverse companies, we developed a framework to define “local” supply chains as operations occurring within a 30 to 400-mile radius. In addition to this distance, our definition incorporates the supply chain segment involved and the percentage of operations that are truly local. By considering these factors, companies can establish a shared language and a clearer understanding of what “local” means within their unique context.

Beyond a definition, the framework also sheds light on the diverse reasons companies are motivated to localize operations. Many pursue localization to reduce emissions and waste, improve agility and quality control, and meet rising customer expectations for speed. Increasingly, regulatory requirements and new standards are also making localization a necessity rather than a choice. However, the transition is not without its challenges. As our research shows, companies often encounter significant capital requirements, supplier reliability issues, and the need for organizational alignment to make local operations a reality.

To address these hurdles, leading companies adopt a range of strategies. These include building local partnerships, piloting new approaches, and investing in enabling technologies. A critical foundation for success is the adoption of shared standards, such as those developed by GS1, which improve visibility and traceability. These standards ensure that product information flows seamlessly across the supply chain, supporting operational efficiency and meeting growing consumer and regulatory demands for sustainability and accountability.

Companies that embrace hyperlocal supply chains can unlock a range of benefits: lower emissions, reduced costs, greater resilience in response to disruptions, and stronger connections with their communities. As supply chains continue to evolve, those who invest in local strategies today may be better prepared for the challenges of tomorrow.

For more about this capstone project, and to see the full results of this research, visit the Supply Chain Management Review online at SCMR.com.