The last few years have highlighted the increasing need for diverse supply chain operations. Many businesses have taken steps to simplify their supply chains, but achieving true diversification can prove more challenging. Still it’s a challenge that must be met by business leaders in this modern age.
Why is Supply Chain Diversification Important
Supply chain diversification – creating a network of alternative suppliers rather than relying on one – is the most effective way to ensure your business can keep operating throughout any local, national or international market changes.
The biggest benefit of supply chain diversification is increased risk management. If one of your suppliers cannot keep up with expected levels due to market changes, there is an increased chance that another supplier could fill the gap and keep your business running efficiently.
A diverse supply chain also allows for more flexibility, allowing you to adapt to changes in demand quicker than competitors. Diversification can also help support collaboration and innovation across the supply chain, driving down costs long term.
So, how can your business achieve supply chain diversification? It starts with a few simple steps.
Define Your Goals
The supply chain is the lifeblood of your business. Therefore, before making any changes, it’s vital that you understand what your business wants to achieve.
Define your business goals in the short, medium and long term. Before making changes to your suppliers, you should also reflect on your business’ wider purpose; supply chains ripple through local communities and can impact businesses’ green-minded goals, so this can be a good opportunity to positively impact your corporate social responsibility.
Engage Senior Management
Supply chain diversification is a big step, especially for a large business. It’s more than simply optimising your supply chain, so you need to make sure everybody is on board.
Your senior management team will be tasked with implementing any diversification strategy, so ensure they are on your side. Explain to them the importance of these steps for your long-term business objectives, then set measurable and accountable short-term goals that keep staff motivated on the journey.
Speak with Existing and Potential Suppliers
Diversification and collaboration go hand in hand. Take the time to speak with both existing and new suppliers, so everybody is on the same page.
Having conversations with existing suppliers can help make existing supply chains more flexible and adaptable, which is crucial in the modern age. New suppliers, meanwhile, may provide new insights or data through their market knowledge that can help your long-term supply chain diversification process.
Here at Expense Reduction Analysts, we’re one of the world’s leading consultancies when it comes to supply chain management. Our expertise across all industries and cost areas can help you to achieve true diversification through an efficient, flexible and effective supply chain built for the modern world.
If you’re interested in finding out how our team could help your business, why not contact us today or explore our supply chain diversification case studies?