For decades, the United States and much of the industrialized world lived in an “Age of Abundance.” Now, world leaders as prominent as French President Emmanuel Macron have suggested that era is ending. The Connexion spelled it out clearly:
“President Emmanuel Macron has called for ‘unity’ from his government, as he warns that France is ‘at the end of [its age of] abundance” and ‘insouciance’ due to the crises caused by climate change, international conflict, and continued supply chain issues.”
Dire statements such as this hint at an imminent threat to the way of life that so many of us have enjoyed for so long. Unfortunately, however, the last few years have revealed that easy access to nearly every good imaginable could be winding down.
COVID-19 exposed the supply chain
COVID knocked back the world back on its heels in late 2019. Although it took a few months before the virus spread to the United States in sufficient enough numbers to warrant dramatic action, that day finally arrived. On March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a global pandemic. Since then, disruptions have rippled throughout supply chains worldwide.
Countries pursued various strategies to fight back against the spreading pandemic. For example, many countries locked down their borders entirely and ordered their citizens to shelter in place. These massive deviation from the norm left economies all around the planet in a pinch. The world economy is structured around a supply chain that requires the movement of people and the free flow of trade. However, both of those things were severely damaged by the emergency restrictions put in place at the time.
Now, two-and-a-half years into the pandemic, many companies have started to reassess their positions in the world and how they might respond if something like this ever crops us again.
Supplier diversity must be a priority
The historic economic model for supply chains demanded that manufacturers work with stable and reliable suppliers that could offer a contract at the best possible price. Then, companies were to sign contracts with those suppliers to lock down lengthy, iron-clad deals.
Now, after everything we’ve all been through, stakeholders have started to question the wisdom of long-term, single-supplier relationships.
Building a diverse supplier base is helpful for several reasons, including:
- A larger talent pool. There’s a large and diverse talent pool available to those who are willing to take advantage of it. What sense does it make to limit oneself to a single supplier when there are so many options beyond that? So, re-examining your existing supplier contracts might be worth your time.
- Supply chain resiliency. It’s possible for a supply chain snag to trip up any given supplier, which can cause short- or long-term problems. It all depends on the nature of the issue and what the supplier does to correct it. That said, manufacturers that want to avoid supply chains problems completely should work with multiple suppliers to avoid the worst of these hang-ups. By diversifying your pool of suppliers, it’s possible to take a few hits here or there along the supply chain and still get up to fight another day.
- Embrace social responsibility. Another reason to consider working with multiple suppliers is because it can be the socially responsible thing to do. For example, there are multiple eco-friendly suppliers out there you can work with. But it’s impossible to work with them – or even know who they are – until you do your research to find out. A diversified supplier base increases your chances of working with environmentally and socially responsible suppliers.
The most important thing to remember is that you don’t want to get caught in a situation where you’re working with suppliers who can’t deliver in a pinch. The world remains incredibly unpredictable right now, and you need to be prepared to deal with the unexpected.
How to build a diverse supplier base
There are several steps you can take right now to begin to build a more diverse supplier base. If you follow these steps, you can set yourself up for encouraging results moving forward.
- Review your existing supplier agreements and spending.
- Speak with your suppliers about their capacity and ability to supply your short-term and long-term needs.
- Use premier automated supplier sourcing software to help make your search easier.
- Inquire about other customers a prospective supplier might have. See if those customers will offer reviews of the supplier.
- Ask some questions about the diversity of the supplier in terms of where they source the materials they provide.
- Examine your own compliance requirements to make sure a new potential supplier meets all those requirements.
- If you do bring on a new supplier, start using them. There’s no added benefit to bringing on a new supplier that you don’t intend to use.
These steps can help you locate the assistance you need from your team of suppliers and expand your supplier base. Given the world we live in now, there’s no better time to start working on this.