In times of soaring shipping costs and extended lead times due to global disruptions, businesses ask: Can diverse suppliers enhance your resilience? The key lies in enhancing supply chain resilience.
The COVID-19 impact: Shipping a 40ft container from China to US jumped from $2,500 in June 2020 to $20,000 in September 2021.The lead time change between the same dates was approx. 50 days to 97 days. Those were the ‘heady’ times of global supply chain disruptions due to the COVID-19 pandemic. There were bottlenecks in both manufacturing and shipping. While all major ports were also experiencing bottlenecks, scheduling, and labor challenges, having a backup supplier from an alternate origin could result in lead time and shipment cost advantage. This clearly also depends on the geopolitical factors impacting your suppliers as each country responds differently to such disruptions. However, this agile approach reduced risks associated with the uncertainty in the market, demonstrating the essence of supply chain resilience.
Having relationships with suppliers in different destinations pays off in such periods of supply chain disruption. For example, your business can avoid stockouts by switching to back up suppliers in Middle East when your main supplier in East Asia is unable to give you an ETA for your order. This potentially reduces the risks posed to your business in terms of lead-time, shipment cost and lost sales.
Optimizing Supplier Management: Diversify Supplier Base
About the Author
Serkan Selcuk
Serkan is a Managing Partner of Middlebank Consulting Group based in the USA. He has wide experience in logistics, supply chain planning and execution. He delivered several projects across FMCG, footwear & apparel retail, automotive and automation industries. This experience has been built through working with organizations across Europe, Australasia and the USA.