Supply Chain Diversification In 6 Steps

Over the last few years, there have been massive shifts in how companies handle their resources. From adjusting to new schedules and routines to adapting new business models, these changes were (and still are) necessary to stay afloat.

In this article we’ll be discussing how to broaden your supply chain. Not only does this practice provide access to new markets, but it also ensures continuity in case of transportation delays, guarantees you a backup plan, and makes it easier for you to adapt to sudden market changes.

So, how can you improve your logistics management processes? What steps do you need to take, and what should you consider?

We’ll answer these questions and more below, so keep reading!

Why Supply Chain Diversification Matters

Diversifying your supply chain means implementing a strategy designed to source or procure your resources across multiple suppliers, locations, or networks. Widening your vendor list helps mitigate risks that could impact the transportation of your goods to consumers. 

In today’s dynamic business landscape, relying on a single source or a limited network of suppliers can expose your beverage business to various risks such as disruptions, delays, and increased costs. A real-life example was when the COVID-19 pandemic brought on widespread supply shortages across multiple continents, creating transportation delays that have only gotten worse due to uncertainties brought on by political unrest and inflation.

That’s why supplier diversification is key.

Diversifying your supply chain by working with a variety of suppliers is a proactive approach that not only mitigates risk, but also enhances your ability to adapt, innovate, and seize new opportunities.

For larger companies, building a global supply chain across multiple countries improves access to labor and equipment supply. Reshoring supply chains is a wonderful idea on paper, but it’s not tangible for a lot of businesses.

This process all starts with assessing your current supply chain to identify potential vulnerabilities and areas that require diversification. This will serve as the foundation for the following steps listed below. Note that supply chain diversification may not be the right solution for every business, and a strategic analysis is critical prior to any decisions being made. 

Let’s look at how you can explore supply chain diversification.

→ Find New Primary and Backup Suppliers

→ Source Local Vendors

→ Evaluate Potential Risks Carefully

→ Consider Small to Medium-Sized Suppliers

→ Establish Your Priorities

→ Communicate With Your Current Suppliers

1. Find New Primary and Backup Suppliers

Start by identifying potential vendors. Create a checklist with the criteria you’re looking for in a primary supplier. This should help narrow your choices and pinpoint vendors you think could help improve your business processes.

Next, submit bids to several vendors who are skilled and have sufficient logistics experience and start establishing rapport with them. 

These kinds of relationships will help you if issues arise with your primary supplier. Having a backup supplier you can trust on standby will ensure your business moves as usual, avoiding supply chain disruption and getting your products where they need to be.

2. Source Local Vendors

Whether you’re a multinational company or a locally-owned business, forming domestic partnerships is beneficial to expanding your list of suppliers. 

Cultivating local partnerships makes it easier to communicate with each other when problems arise, reduces logistical issues, and shortens turnaround times. Sourcing local vendors is one of the best ways to boost supply chain resilience.

3. Evaluate Potential Risks Carefully

When choosing a new vendor, be diligent in evaluating risks. Be mindful of the economic, environmental, and political factors that could cause business disruptions and impact your supplier and their ability to do business.

Will they be able to meet their responsibilities? What kind of shipping solutions do they offer? Can they comply with your company’s regulations? 

Ask yourself these questions before finalizing your supplier list.

4. Consider Small to Medium-Sized Suppliers

When it comes to supply chain diversification, businesses tend to gravitate toward larger, globally-recognized suppliers for their reach. However, choosing a small to medium-sized vendor also has its merits. 

For starters, you get greater flexibility and value for money due to lower administrative costs. You’re also more likely to form an actual relationship with a smaller supplier, meaning you can work more collaboratively to explore new solutions. Bolstering your current supply chain with a smaller supplier can be a rewarding experience! 

5. Establish Your Priorities

Once you start to diversify your supply chain, it can become challenging to keep track of your strategic priorities. Don’t lose sight of what matters most. 

For example, do you value speed or security more? If you’re transporting an extremely durable product, you may find that speed is the be-all and end-all. However, if your product is delicate—like beverages in glass bottles—you’ll likely need to make security a priority and ensure whoever you partner with feels the same way. 

Is cold chain shipping important to you? If your product needs to be delivered fresh and temperature controlled, like those found in the food and beverage industry, then partnering with a supplier that not only understands cold chain shipping, but also takes the steps to do it right the first time, is something you should be prioritizing.  

6. Communicate With Your Current Suppliers

Supply chain diversification doesn’t mean overhauling your entire vendor list. 

Even if you deem your new supplier more reliable, they might not be able to immediately ramp up their usual production activities to meet your orders. Don’t cancel your existing contracts until you’re ready to ensure a smoother transition to a new vendor.

You shouldn’t lose sight of your existing relationships, either. Try to show people you value them even if you decide to no longer work together.

Streamline Your Logistics Management with Brew Movers

When it comes down to it, selecting your vendors carefully is the key to the successful diversification of your supply chain—and no one does logistics better than Brew Movers. 

We want you to focus on what you do best—making craft beverages. Believe us when we say our relationships with brewers extend beyond managing logistics; we become partners in your success. From LTL shipping to the innovative Pallet Parka cold chain shipping method, you can trust our expert team to find a solution that works best for your business.

Contact us today to learn more about diversifying your supply chain as well as the fantastic logistics solutions we offer!