What is diversified sourcing, and how do you do it?
Diversified sourcing solutions have impacted the post-pandemic supply chain world and are here to stay. But what does it take to implement it into your sourcing process? And what is it exactly?
What is diversified sourcing?
Diversified sourcing means purchasing products from a broader range of countries rather than placing all orders from one country. By looking into a broader range of sourcing countries, you can also supply your customers with a unique assortment of goods. During the pandemic, many businesses ran into supply chain issues as China, the most popular sourcing country, went into lockdowns, bringing production to a screeching halt.
Limiting yourself to a singular sourcing country can cause a wide range of supply chain issues. If the government shuts down due to pandemics, war, or other matters, no products will be produced, packaged, or shipped on the pre-planned schedule. This leads to back-ordered production, limited in-store stock, and higher prices for you and the end-consumer. Still, the main concern for businesses is to not end up with empty shelves caused by the lack of products. Companies must ensure a steady supply of goods to meet customer demand.
What are the benefits of diversified sourcing, and how do you do it?
Diversified sourcing solutions have many benefits. Having a broader range of trusted suppliers can provide advantages for your business. The benefits include a more comprehensive selection of materials and sustainable sourcing as well as a capability to tailor products to match the brand identity, tap into trends, or explore seasonal products.
Forming your strategy around diversified sourcing allows you to promote economic growth in sourcing countries by creating more well-paid jobs. This benefits the local economy and adds to the purpose of your business. In this way, diversified sourcing can assist in meeting your business’s Corporate Social Responsibility and ESG goals. Keeping compliance in mind allows for an ethical and sustainable sourcing process.
There are endless reasons why diversified sourcing could benefit your business. Diversified sourcing reduces the risk of additional costs on materials, products, and logistics. You can minimize product pricing and explore a more sustainable route by looking into new countries with fewer high pricing spikes and a wide material range.
Spreading out your sourcing strategy minimizes a total loss of production or manufacturer based on natural disasters. By sourcing diversely, you can also lower your carbon footprint, increase the fulfillment lead time of products, and decrease import tariffs depending on where you source from. By diversifying the sourcing, businesses can tap into new markets and find new ways to create value for their customers or end consumers. Having a sourcing strategy based on diversity, you can market your business better to Millennials and Gen Z. The two generations search for uniqueness and diversity and have a growing market share. By having a more diverse range of products, you can better match your sourcing with the values of the coming generation.
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