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In the current economic scenario where businesses are shutting shops with alarming regularity, it has become necessary for organizations to diversify their supply chain. Given the importance of the subject, we hosted a webinar on the topic – From Chips to Dips in Service? Supply Chain Impact of Diversifying Chris Kupillas, VP Sales, at BlueGrace Logistics discussed the topic. They talked about why it was crucial for businesses to bring in variety in their supply chain, what factors were needed to be considered and the challenges that businesses might face in the process.
Below, taking reference from the article, we discuss why this is good for the business and how it can benefit them and other stakeholders in the ecosystem.
As the quote from Greg Foran suggests, diversifying the supply chain helps businesses stay relevant. There are multiple ways in which businesses can do this. They can offer variants in their current product offering, introduce new products, introduce the business to different regions within their country or go global.
Variants and new products will allow businesses to retain customers by enabling them to cater to their ever-changing needs and demands. And entering new regions or countries will widen their customer base. A business with more products and/or serving multiple regions or countries tends to have a better chance at survival in times of economic recessions or downturns or political strife.
No. For a business to be prepared for different cycles of the market, it is also important to introduce options on the supply side of the business. This means identifying new sources for raw materials, spare parts, and alternative manufacturers where they can outsource the manufacturing of their products if required. They also need to identify service providers like transporters, warehouse operators and 3PL service providers who can work with them when needed. Having these alternatives on standby or in a working relationship will ensure that in the event the regular service provider cannot fulfill the business requirement, the business will not suffer.
A manufacturer is just one of the beneficiaries of a diversified supply chain. Other stakeholders in the business ecosystem also benefit from it. For example wholesalers, retailers, e-commerce websites, also benefit in the form of more saleable goods to offer their customers. For them, the wider the range of products, the higher the probability of making a sale. This means more business for them which ultimately generates more business for the manufacturer.
Similarly, it provides transporters and other logistical service providers with more business and regular work opportunities. Take, for example, a small transporter who is working with a company that produces only seasonal goods – let’s say woolen garments. The transporter will only get work from this organization until the woolen garments season lasts. After that, it may have to search for another client until the season rolls back again. Now, if the same company started to also produce summer wear, the transporter will not have to engage another client if it doesn’t need to. It will have year-round work from one source.
That’s not all. Diversification also empowers customers. It gives them multiple options to choose from. Since diversification also creates competition, it provides customers not only with quality options but also competitively priced products, making sure businesses work on creating better products within a set budget.
Now that we know why diversification is crucial for businesses, let’s look at why it is the lifeblood of it benefits the supply chain of your business.
This is just the tip of the iceberg of supply chain diversification. To know more about the topic listen to our webinar: From Chips to Dips in Service? Supply Chain Impact of Diversifying, hosted by Chris Kupillas, VP Sales where they talk about the importance and the challenges of diversifying the supply chain.
To know how you can improve your supply chain and transportation to keep up with your customers demands, get in touch with our team today!
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