28 Jun 2023 -
 General

Supplier diversification: put it in your toolkit

toolbox

Supplier diversification may be the answer to many of the problems manufacturing supply chains face, says Supply & Demand Chain Exec.

Manufacturers have an important incentive to diversify their supply chain and suppliers. The increased flexibility and redundancy it offers can lead to improved resilience.

Globalisation has allowed us to reap the benefits of a global economy, but globalisation has also brought about more delicate supply chains. Having a diversified supply chain works to counteract this vulnerability by providing alternatives.

Companies can increase the number of suppliers they work with, but it doesn’t always mean more suppliers. Companies can also relocate strategic operations. North American companies have implemented a ‘China + One’ strategy, which allows their companies to rely on other countries, like India or Mexico, for their supply chain.

Multimodal logistics, which involve multiple modes of transport, is another way diversification can be implemented. Bahrain, an island nation in the Persian Gulf, launched a Sea-to-Air logistics Hub in 2021 to decrease disruptions to shipments. With the help of technology, it has proven to be 40% more cost-effective than sea freight logistics.

Although adding more suppliers can have benefits, it’s important to find the right balance and not go overboard. It can be expensive and having too many people onboard can be counterproductive and lead to confusion and complication. A supplier management system can help streamline operations among many suppliers and offer access to all the suppliers from a singular dashboard. It can be used to monitor progress and outcomes.

Additionally, supplier diversification should not be done in isolation. It should be accompanied by improvements in other areas so it can be fully optimized. Examples include improved inventory management, automation, and adoption of advanced technologies.

In conclusion, supplier diversification is critical for survival in today’s turbulent market. It reduces supply chain disruption, increases resilience, and allows companies to maintain their competitive edge in the global economy. It’s important to find the right balance between the right number of suppliers and other improvements so the full potential is realized.

To avoid electronics supply-chain disruptions, you may also wish to consult an expert in electronics component supply. With more than three decades of supply-chain expertise, Astute Electronics is ideally placed to work with you on your daily component requirements.

For more help with looking at supply chain options, contact Astute Electronics

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