Don’t put all of your eggs in one basket. This statement has been hammered into our heads over and over again when it comes to investing. While the statement is true when it comes to investing, it also remains true when it comes to manufacturing and supply chain. For many decades, the world has sourced most of its manufacturing from a select region of the world. But as time goes on, we learn that it’s not a great idea to rely on a few select countries to make most of the goods for the rest of the world. We will go into why that is the case, and how you can avoid running into these issues through diversifying your supply chain.
1) Risk Reduction: Having a key network of suppliers spread out amongst different countries allows you to avoid disruptions that are outside of your control. Despite how amazing our world is, bad things still happen from time to time. Natural disasters, societal unrest, trade wars, violent wars. These events are out of your control and can halt your manufacturing jobs. Having suppliers in different regions ensure that you will always have a plan B if something destabilizes your plan A.
2) Avoiding Holiday Delays: In our diverse and multicultural world, there are many public holidays where countries take well deserved days off to celebrate with family and friends. Chinese New Year, Diwali, Ramadan, and other public holidays might delay the manufacturing or shipping of your products. Now with Global SC Hub’s directory, you can easily find amazing manufacturers in other countries to work around labor disruptions caused by public holidays.
3) Reduce Shipping Costs: Having manufacturers in different countries allows you to strategize where to make certain parts based on their cost to ship to their end destination. Some parts might be easy to manufacture and ship from any part of the world. But other large parts might be too big to efficiently ship across the world. So you might opt to find a manufacturer that is closer to you, despite maybe having higher manufacturing costs. Having manufacturers in different countries allows you to optimize your shipping costs and shipping times.
4) Manufacturing Expertise: Everyone is the best in the world at something. Manufacturers in different parts of the world can excel in certain manufacturing techniques compared to others. Having manufacturers in different parts of the world ensures that you have access to different manufacturing facilities if you need highly complex jobs to be completed.
5) Fostering Key Partnerships: Having a network of trusted manufacturers in different countries allows you to have a network of people to help you. Building a long term working relationship with different manufacturers around the world can bring helpful benefits like access to different resources, references to contacts in their country, or unique ideas when solving problems.
Those are 5 of our favorite ways on how diversifying your supply chain can help you. We strongly believe that the entire world will benefit from a more diverse supply chain. Global co-operation helped society grow, it will only take the global community even farther when we diversify even more.
Do you have any other reasons why you think diversification is important to your supply chain?
Good points