Exactly why is supplier diversity important

Exactly why is supplier diversity important

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This informative article explains a few strategies to lessen and prevent supply chain disruptions. Find more here.

In supply chain management, disruption within a path of a given transportation mode can dramatically impact the whole supply chain and, often times, even take it to a halt. As a result, company leaders like P&O Ferries CEO and Maersk CEO work hard to add flexibility in the mode of transport they rely on in a proactive manner. As an example, some businesses utilise a flexible logistics strategy that utilises numerous modes of transportation. They encourage their logistic partners to diversify their mode of transportation to incorporate all modes: trucks, trains, motorcycles, bicycles, vessels as well as helicopters. Investing in multimodal transport techniques like a mix of rail, road and maritime transportation as well as considering various geographical entry points minimises the weaknesses and risks associated with counting on one mode.

In order to avoid incurring costs, different companies think about alternative routes. For instance, due to long delays at major international ports in certain African countries, some businesses encourage shippers to develop new routes along with old-fashioned paths. This plan identifies and utilises other lesser-used ports. In place of relying on an individual major commercial port, as soon as the shipping business notice hefty traffic, they redirect goods to better ports over the coast and then transport them inland via rail or road. In accordance with maritime experts, this strategy has many benefits not merely in relieving pressure on overwhelmed hubs, but additionally in the financial development of rising economies. Company leaders like AD Ports Group CEO may likely trust this view.

Having a robust supply chain strategy could make firms more resilient to supply-chain disruptions. There are two types of supply management dilemmas: the very first is due to the supplier side, namely supplier selection, supplier relationship, supply planning, transportation and logistics. The second one deals with demand management problems. They are problems linked to product launch, product line management, demand planning, product pricing and promotion planning. Therefore, what typical strategies can firms use to improve their capability to sustain their operations when a major disruption hits? According to a recent study, two strategies are increasingly appearing to be effective when a disruption occurs. The initial one is known as a flexible supply base, while the second one is named economic supply incentives. Although a lot of in the market would argue that sourcing from a single supplier cuts expenses, it may cause issues as demand fluctuates or in the case of a disruption. Thus, relying on numerous companies can offset the risk associated with single sourcing. Having said that, economic supply incentives work if the buyer provides incentives to induce more suppliers to enter the market. The buyer could have more flexibility this way by moving manufacturing among vendors, especially in areas where there exists a limited amount of companies.