The Importance of Supplier Diversification

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Your supply chain relies on multiple factors to keep up the steady stream of goods you need for your business. Whether you’re bringing in raw materials or finished products, you need to know that everything will arrive to the right location, on schedule, to keep your business flowing smoothly.

Unfortunately, disruptions happen all too often. 

A holiday interferes with shipping times. Cargo gets stuck. Delivery driver shortages make it hard to get everything where it needs to be in a timely manner. Suddenly, you may find yourself struggling to manage customer expectations and ensure that you have the steady supply of goods your business needs. By diversifying your suppliers, however, you can improve overall supply chain resilience and create a more responsive supply chain, as well as experiencing a number of other key advantages.

Reasons to Diversify Your Suppliers

There are key reasons to focus on supplier diversity as you build and manage your supply chain.

1. Decrease the Impact of Disruption

Disruption at any point in the supply chain can have an immense impact on your business. By diversifying your supply chain, you may find that it’s easier to decrease the impact of that disruption. What one supplier cannot provide; another might be able to offer. As a result, you will be better positioned to ensure that you can still meet the needs of your customers. 

2. Scale Up as Business Grows

In some cases, your business may be at the mercy of its suppliers to ensure its continued growth. You cannot supply your customers with stock that you do not have and cannot bring in. In many cases, you may find that your current suppliers are only able to send a specific quantity of the items you order on a regular basis. As your business grows, you may find that your suppliers can no longer meet your needs. By diversifying your supplier list, on the other hand, you will often find yourself in a better position to grow your business, since you’ll be able to bring in more stock more easily. 

3. Diversify Your Options

Different suppliers may be able to offer you different options when it comes to the goods or raw materials you can order. That can offer several advantages. First, it may put you in a better position to offer a wider selection to your customers. Different suppliers may offer you different brands, different materials, or simply more options for your customers. Second, it may mean that you can provide the options that different customer groups really need. Suppose, for example, that Option A, delivered by Supplier 1, is extremely popular at one location, but Option B, delivered by Supplier 2, has greater sales at another. With supplier diversity, you can send those items where they really need to go.

4. Know Pricing Options

In many cases, you may feel at the mercy of your suppliers when it comes to pricing. They have the power to determine what you will pay, and if you want to bring in those goods or raw materials for your customers, you will have to pay those rates. As you diversify your supply chain, however, you will find that you’re in a much better position to negotiate pricing. You may have a better overall understanding of the market and what options are available to you, and you may feel more confident negotiating the prices that make the most sense for your business.

In addition, when you have multiple suppliers competing with one another to send in the supplies your company needs, you may note that suppliers are naturally more willing to lower your prices. Competition often increases the odds that suppliers will offer options that better fit your needs. 

5. Improve Shipping Times

If you use a single supplier for all your needs, you will have to wait for that supplier to send out goods for you. If there are any delays along the way, including weather-related changes or changing seasonal demand that influences how well the supplier can send out those essential items, there is little you can do about it. When you diversify your suppliers, on the other hand, you have multiple options for getting those items to you. You may be able to get items from a supplier that will not have to come through an area of difficult weather, for example, or you might discover that, while one supplier is dealing with serious shortages, another is able to get the goods you need.

How to Effectively Diversify Your Suppliers

While you may experience a number of advantages when you choose to diversify your suppliers, it’s important to make sure that you’re prepared for potential challenges. For example, you may find it more difficult to juggle available inventory or determine when it’s time to reorder. However, there are several strategies you can use to avoid those challenges as you diversify your supply chain.

Supply Chain Planning Software

Supply chain planning software can make a huge difference in your ability to manage more than one supplier. Your supply chain planning software can better predict what goods you will need, when you will need them, and how you can best get them to you. Furthermore, it can manage auto-ordering or provide notifications when stock hits a certain level, so you can more easily keep up with where your goods need to come from and when you need them. 


Make sure you communicate regularly with your suppliers to ensure that you know what challenges you may face. By keeping the lines of communication open, you ensure that you’re in a better place to negotiate any difficulties coming down the line. 


Diversifying your supply chain does not mean that you should give up on your business’s priorities. Ethical sourcing, for example, remains important even if you need to bring in more suppliers. Set your priorities clearly so that you can more easily choose the right suppliers for your needs. 

Choose a Better Supply Chain Planning Solution

Are you looking for a more effective supply chain planning solution that will allow you to diversify your suppliers and keep up with your needs? Contact us today to learn more about how we can help.

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