Let alone the aftermath of a catastrophe or a distortion caused by an exception, even the minimal disruptions to any supply network pushes companies to implement a supplier diversity program. The more ailing the cause, the more expansive the network. But by the time the memory of disruption fades, the network becomes again tighter and more consolidated. This inconsistency preys on the supply chain cost and performance.
To understand this, let’s go back almost 24 years. In 1997, a fire broke out at Toyota’s only supplier of P-valves and sparked a change in the existing practices. There on, Toyota would dual-source all parts and ancillaries. However, by 2000, Toyota once again solidified its supply network, citing greater economic possibilities and scale from single sourcing.
Seemingly, it’s an ad-hoc approach that is brought to life whenever companies confront any significant disruption. At times, it does incur inevitable transaction costs as well. Consider this as a trade-off: prompt futureproofing but at higher costs, or lower costs but an increased vulnerability to disruptions. Researchers suggest the right answer to this dichotomy is the timing. And what better time than now? After a seismic upheaval like the COVID, the prevention of the future becomes a key priority. Today’s businesses are actively considering diversifying their supply chain by investing in new ways of embedding opportunities across their supply network. As they were quick to realize that a diverse supply network will not only uplift their brand recall amidst customers but will also improve their bottom line. If you are still dubious about implementing a diversified supply chain, this portfolio of tangible benefits might move the needle:
Tougher competition but increased profits
Neck and neck competition to win capacity and haul within a supply chain gives way to more choices. For businesses, this means an improved chance of evaluating cost, location, and the type of shipment when selecting the best options for them. Once diversified, a supply network can stir up competition amongst suppliers to cut down prices. According to a study, companies with a diverse supply network enjoyed reduced operational costs and a 20% lesser spending. This leads to an increased ROI because of the ability to offering highly competitive prices, better service quality, and the desired customer satisfaction. On a regional level, this could mean increased spends and higher employment achieved by boosting the economies.
All-inclusive workforce with diverse talent
Identifying the several groups in your business community that propel your business has far more benefits than just adhering to the workforce requirements. In a global recruitment trends report, the MENA region was shown to be one of the most proficient diversity practitioners because it was the most embraced trend within almost half of the companies. Businesses making use of a diverse supply network are known to channelize revenue more widely and efficiently across their partner network. The result is an improved economic footing of their future and prospective buyers, which finally translates into higher sales.
Unlock new levels of innovation
With an extremely diverse supplier network, all businesses will have unfettered access to their partner’s technology stack via their offerings. On top of that, being small and nimble has its own advantages – the typically smaller size allows them to react fast to any business exception and wear it off faster.
Additionally, this also encourages transparency to thrive on the symbiotic relationship and fosters a collaborative culture. With no silos between the partners, there are greater chances of sourcing new products for the entire ecosystem. And all this while enabling companies to maintain profit margins, increase customer base, and encourage innovation.