Diversifying the supply chain: A strategy for growth and resilience
Supply Chain Brain has been a go-to resource for insights, advice, and trends concerning the struggles manufacturers (and, indeed, the world) have been facing concerning the movement of critical materials and equipment. This week, the site suggests how diversifying supply chains can not only provide an ounce of relief but contribute to a company's long-term growth and resiliency.
“By having several sources for each part of the chain, operations can fall back on a different supplier should one of them fail. As a result, the overall operation is only minimally affected by upstream events.” writes Edward Routh, Supply Chain Brain blog contributor.
What exactly does a diversified supply chain look like? Says Routh, it's about weighing several key factors to create a network of carefully vetted material and service providers that matches the company's specific demands: "When determining which suppliers to use, a business must consider factors such as price; location; quality; and environmental, social and governance compliance. Doing so will ensure that the product is as reliable and consistent in quality as possible, with minimal effect on the consumer or end-user."
While diversification is a smart play, Routh warns that environmental considerations must also be part of the process and that it is possible to over-diversify one’s supply chain.
“Diversification ensures that a business won’t remain vulnerable to the shortages and obstacles that have plagued every industry in recent years,” they add. “Nevertheless, companies that end up over-diversifying their supply chain will end up struggling just as much — if not more so — than those that don’t have a fallback.”
Read more about the concept of supply chain diversification, its benefits, and steps to get started in How Supply Chain Diversity Can Optimize Company Growth
Back to Newsletters
