One of the main concerns of top global corporations today is the real risk of supply chain disruptions led by life-changing events such as pandemics and international conflicts. The answer to addressing these concerns is diversifying your supplier base.
In this post, we’ll explore seven reasons why diversifying your supplier base is important and why you should start today.
What does it mean to diversify your supplier base?
Diversifying your supplier base means sourcing your products or services from various suppliers rather than relying on one or a few. This can include suppliers from different regions, countries, industries, or backgrounds.
7 Benefits of diversifying your supplier base
Over three-quarters of businesses consider supplier diversification a high priority and plan to increase the total number of suppliers by 2025, according to DHL.
But why would you add more complexity to a complex global supply chain?
Here are seven key reasons to diversify your supplier base:
#1 Diversification helps mitigate risk and build resilience into your supply chain
By having multiple suppliers, you can reduce the impact of disruptions, such as natural disasters, political instability, labor strikes, or quality issues, that may affect one or more of your suppliers. You can also avoid losing a key supplier due to bankruptcy, acquisition, or termination of contracts, helping you maintain business continuity.
#2 It helps minimize delays
Delays in delivery can harm your customer satisfaction, reputation, and profitability. By diversifying your supplier base, you can reduce the likelihood of delays caused by factors such as capacity constraints, transportation issues, or customs clearance.
#3 Enhance your brand’s ESG proposition
ESG stands for environmental, social, and governance, and it refers to the criteria that measure the sustainability and ethical impact of a business.
By diversifying your supplier base, you can improve your ESG proposition by supporting suppliers that are environmentally friendly, socially responsible, and adhere to high governance standards.
#4 It helps negotiate better prices and terms
By having multiple suppliers, you can increase your bargaining power and leverage the competition among them to negotiate better prices and terms. You can also take advantage of the different cost structures, exchange rates, and tax regimes of your suppliers to optimize your costs and margins.
#5 It allows faster delivery times and reduced freight costs
By sourcing from suppliers that are closer to your customers, markets, or factories, you can reduce the distance and time required for transportation. This can help you save on freight costs, lower your carbon footprint, and increase your speed to market.
#6 It increases flexibility
A diversified supplier base allows you to switch between suppliers or use multiple suppliers simultaneously to meet your requirements for quality, quantity, variety, or customization. You can also access new products, services, or technologies that your suppliers may offer or develop and use them to enhance your offerings or create new ones.
#7 Penetrate new markets
By working with suppliers from different regions or countries, you can gain insights into the local markets, cultures, and trends. You can also leverage your suppliers’ reputation, network, and distribution channels of your suppliers to reach new customers or expand your presence in existing markets.
How BabelusAI can help in supplier discovery and diversification
BabelusAI is the new way of searching, assessing, and discovering suppliers that can help you diversify your supplier base and improve your business performance. BabelusAI can help you:
- Discover new suppliers that match your product or service requirements using simple and natural language.
- Collect and search for information from various sources.
- Engage directly with vendors and collect data from them using the unique “Spaces” feature.
Click here to contact us and learn more about BabelusAI, or book a call now to discuss setting up a pilot for your company, free of charge.