Diversifying Your Supply Chain: Why it is Important and How it Can Benefit Your Company’s Bottom Line.
In this post, we will discuss the importance and route to acquiring a diverse and resilient supply chain and exploring ways that you may be able to apply these principles within your current procurement process or sourcing strategy.
Importance and route to acquiring a diverse Supply chain.
Diversity is a word with heavy connotations in popular culture, and for good reason. Ultimately, it’s a positive - diverse workforce, diverse diet, diverse experiences - all things to be encouraged and with proven benefits. This is no different for having a diverse supply chain, it breeds a healthily competitive environment that encourages Suppliers to deliver the best results, and Buyers to resource smarter - choosing the right Suppliers based on deliverables rather than relationships.
The benefits of having a diverse supply chain have been identified by Forbes to include; Competitive advantage, Innovation, Access to new markets, and a positive socioeconomic impact. All of the above have a tangibly positive impact on both business operations and their bottom line.
As Rod Robinson, Senior Vice President at Insight Resourcing Group, stated;
“Having a diverse supply chain enabled his company to enhance their offerings...drive higher procurement cost savings and optimise (their) overall supply chain value”.
Similarly, Harvard Business Review has written an article highlighting the social responsibility companies have to implement an inclusive sourcing strategy, and it’s positive effect on companies’ operations. This additional value is a result of an inclusive RFx (a Request For anything - Proposal, Quotation, Information etc) strategy “widening the pool of potential Suppliers and promoting competition in the supply base, which can improve product quality and drive down costs”.
Beyond the “feel good factor” often associated with diversity programmes, there is no denying that it also has economical benefits for businesses, similarly improving their supply chain resilience as result of a more dispersed supply chain. In the context of recent events, both relating to the outbreak of Covid-19 and natural disasters, the importance of building a resilient and flexible supply chain has never been more acute.
How to build a diverse and resilient supply chain.
As the Chartered Institute of Procurement and Supply reaping the full benefits of and successfully implementing a “diverse” or “inclusive” RFx strategy requires Buyers to be proactive. The key is knowing where to start in order to ensure goals are met and objective decisions are made to diversify the supply chain. Forbes has helpfully put together a guide to facilitate companies to take these steps with confidence.
Some of the crucial steps in the guide include identifying where your current expenditure is going, and how it is being distributed across sectors and companies. Having this knowledge enables you as the Buyer to identify where that money can be redistributed and identify the gaps in the companies and sectors your reach in your tenders.
At this point you can identify suppliers that fulfils the requirements in those gaps and align with your strategic goal to engage with suppliers that diversify your current pool. Ensuring you have a strong sense of the goal you aim to achieve in building an inclusive supply chain, and starting to evaluate your current and future Suppliers on that basis helps to quantify the progress you’ve made in your commitment.
DeepStream enables our partners on the platform to implement the transparent processes necessary to take these crucial steps. For example, DeepStream creates a list of all the Suppliers that your company has invited to the platform, and as part of their sign up process, the Supplier companies tag the products and services they provide and their location. This makes it easy for Buyers to identify the sectors and countries that they have Supplier relationships in. Further, new Suppliers can be searched on the Network by products & services and location, simplifying the research process that goes with identifying potential suppliers.
When going out with your RFx DeepStream’s flexible and customisable Evaluation module empowers Buyers to include the diversity of a Supplier in their evaluation criteria - both in relation to the Buyer’s current Supplier pool and Suppliers’ employees. Further, the Audit Trail logs all events on a RFx once it has been sent to Suppliers, keeping a record of both the Suppliers invited to tender on previous and current requests, as well as the Suppliers awarded the request and how they were evaluated. This enables companies to hold themselves accountable to their inclusive strategic initiatives, driving them to success.