In an increasingly volatile global trade environment, with trade wars and protectionist tariffs hitting businesses like curve-balls, it is critical for supply chain managers to be proactive in protecting their sources of supply and insuring business continuity. Without the benefit of assurance on what shape future changes and tariffs will take, it is more important than ever before for procurement professionals to consider dual- or multi-sourcing strategies to protect their supply chains.
Dual sourcing has long been a part of many supply chain managers' toolsets. The impetus to find two, or more, sources for a certain product or service can stem from a series of motivations:
- Capacity based. A chosen supplier does not have enough capacity to supply a customer's demand, and so parallel alternative suppliers are required to meet requirements
- Competition based. Production volume is spread across two or more suppliers, with the opportunity to win further volume if superior delivery, quality and cost goals are met
- Risk based. Where components and/or services are especially critical for customer protection, dual sourcing is engaged to mitigate risk (internal supplier risk, geographic risk, exchange rate risks etc.)
The risk based incentives are becoming especially critical for sourcing managers to consider in the current environment, particularly if critical supply points are located in countries with tariff and political volatility.
Want to act but don't know where to start? Let KickStage Consulting help. We provide a free supply chain risk analysis consultation and, with many international sourcing specialists located around the world, can help swiftly and effectively design strong, competent multi-source supply chains for your industry.