How Global Sourcing Reshapes European Supply Chain Strategy

The landscape of European supply chain operations continues to evolve as businesses navigate the complexities of global sourcing while maintaining regional partnerships.

Analysis from Eurostat reveals critical insights into how enterprises across the continent are structuring their procurement networks, balancing international opportunities against domestic resilience.

Eurostat's analysis discovered that 73% of European Union (EU) enterprises source most of their products from within the EU, demonstrating the importance of the European single market.

This signals a strategic preference for regional supply chain networks, which offer greater visibility and reduced logistics complexity compared to extended global operations.

Global value chain dependencies

Enterprises organise their operations into global value chains (GVCs), relying on global suppliers as critical components. For EU policy, GVC statistics provide analysis on job movement outside the EU, dependency on foreign parts and the EU's role in global trade.

Understanding these structures allows assessment of how much regional trade is 'local' versus reliant on other countries. Supply chain sustainability has become a key focus for business leaders, recognising that sustainable operations lead to resilience, cost savings and more loyal customers.

For international sourcing, the primary destination for EU countries was other EU countries at 73%, followed by non-EU European countries (26%), India (19%) and the UK (17%). Proximity and labour costs remain key factors in supply chain design.

The most international sourcing comes from small, open economies with high labour costs, including Slovakia (11.38%), Ireland (9.86%) and Denmark (9.39%). This contrasts with Bulgaria (0.80%) and Poland (1.11%), where enterprises engaged less with international sourcing.

Within this report, insourcing refers to international sourcing to a foreign organisation within the same multinational enterprise group, whereas outsourcing refers to sourcing to external providers. Of companies sourcing abroad, 72% focused on insourcing, contrasted to 39% who outsourced.

Sector-specific sourcing patterns

Eurostat found that more enterprises from the business services sector sourced abroad (60%) than those within industry and construction sectors (40%).

Manufacturing led international sourcing (37%), followed by wholesale and retail trade; repair of motor vehicles and motorcycles (17%) and information and communication sectors (12%).

Due to digitalisation, more business functions are now sourced internationally as processes can be described clearly, discussed electronically and monitored remotely.

The shift towards digital operations has enabled businesses to source specialised skills from global talent pools, particularly in areas such as software development, data analysis and customer service functions. Consequently, 72% of enterprises source support functions internationally, against 51% sourcing core functions.

Supply chain challenges and adaptations

According to Eurostat, 48% of enterprises purchased raw materials from the EU, whereas only 16% supplied them to the EU. This imbalance highlights potential supply chain vulnerabilities and dependencies on inbound logistics networks.

GVCs have faced rising barriers including transport disruptions, supply shortages and rising input costs. 56% of GVCs reported Covid-19 related issues and 62% were affected by energy-related input costs.

Many responded by changing procurement strategy, turning towards digitalisation, strengthening EU-based partnerships, farshoring and supplier diversification.

At the beginning of her second term, European Commission President Ursula von der Leyen said: "We need to make it easier to do business in Europe, to innovate in Europe, and to embrace the newest technologies."

The main driver for international sourcing relates to cutting labour costs (34%), followed by strategic decisions taken by group heads (33%) and reduction of other costs (28%).

However, legal or administrative challenges (33%) and tax barriers (28%) create supply chain complexity.

The survey demonstrates the complex issues of GVCs alongside the benefits and concerns of international sourcing, which supply chain leaders must consider when designing resilient procurement networks.