You’ve probably known the expression, “Don’t put all your eggs in one basket” since early on in your childhood. This same principle is at work in your 401(k) and other retirement income investments, which pool small investments into a wide and diverse range of portfolios to insulate them against market shocks and prevent one company’s downturn from scuttling your investment plans. If your house has a security system, it probably has at least one redundancy in place so that if one system fails, your home is still protected. All across your life, you rely on redundancy, diversity, and backup plans to stay secure and on-target to reach your goals. Your supply chain management practices aren’t any different—which is why it’s so important to have diversity in your supply chain.
In this blog, our PVF supply experts will show you the benefits of implementing a diverse supply chain and provide advice on how you can enhance the diversity of your suppliers. Read on to find out how to boost your supply chain diversity and set your business up for success!
Why Supplier Diversity Is Important for Risk Management
As a purchasing manager, you have a dual responsibility to ensure that your team has the products and supplies they need for each project available on-time to meet their deadlines and that you can acquire them without blowing through your budget.
So if you just have one supplier for steel pipe or valves, what happens if that one supplier suddenly needs to hike up their prices in response to market dynamics? What if they have a supply chain issue of their own that cuts them off from a preferred manufacturer or material source? Suddenly, without a sufficiently diverse supply chain, their supply chain problem becomes your supply chain problem—and you have to deal with higher prices that strain your budget or longer lead times that chafe against your project timelines.
Exploring the Benefits of a Diverse Supply Chain
By enhancing your supplier diversity—actively incorporating a wide range of suppliers and manufacturers from different backgrounds, geographical regions, and specialties—you insulate your operations from problems like the ones mentioned above and maintain your competitive edge among fabricators and contractors. Dual-sourcing and multi-sourcing provides a layer of redundancy that prevents bottlenecks if your usual go-to can’t fulfill an order on the time scale or at the price point you need.
The benefits you reap include:
- Reduced risks of disruptions to your operations caused by supplier instability, natural disasters, or economic or geopolitical factors
- Access to a wider selection of innovative and unique products, services, and solutions
- More negotiating power for better pricing and more favorable terms on purchasing contracts
In previous blogs, we’ve gone into detail about optimizing your supply chain with strategies such as bulk purchasing, wholesale inventory management, and freight logistics management. Building a more varied and diverse supply chain also makes it easier for you to incorporate these strategies into your purchasing and inventory management decisions where appropriate.
Eight Ways to Build a More Diverse Supply Chain
Now that you have a clearer understanding of why supplier diversity is important, it’s time to look into strategies for building a more diverse supply chain infrastructure that can better support your projects. It’s one thing to know why you need a broader range of suppliers—it’s another to know how to achieve that.
Fortunately, American Stainless has plenty of tips for you on how to search for, find, and build your own diverse network of PVF suppliers:
- Broaden your search by using industry directories, trade associations, and supplier databases like Thomasnet® to identify new suppliers.
- Attend trade shows, expos, and networking events in your industry to find new manufacturers and distributors for the PVF products you need. Even in the post-pandemic era, in-person networking hasn’t gone away!
- Research smaller and niche regional suppliers to diversify and mitigate your geographic risks. Partnering with regional PVF suppliers near your project sites can ensure shorter shipping lead times and quicker inventory replenishment in emergencies.
- Seek out and partner with suppliers that focus on unique materials or niche PVF products that can improve your project outcomes.
- Use Supplier Relationship Management (SRM) platforms to monitor supplier performance, track inventory levels, and anticipate disruptions.
- Partner up with other fabricators or contractors to form cooperative purchasing groups, which empower all of you to benefit from greater bulk purchasing power.
- Negotiate contracts with flexible terms to lock in pricing and supply commitments.
- Collaborate with selected alternative suppliers to create contingency plans, in which these alternates will step up as pinch-hitters if your go-tos experience their own supply chain disruptions.
Add Diversity to Your Supply Chain with American Stainless
We understand the importance of having enough diversity in your supply chain. American Stainless maintains an extremely diverse pool of manufacturers to ensure we can get the right products to the contractors and fabricators who depend on us—quality pipe, tube, valves, fittings, and support materials at competitive prices, delivered ASAP to keep your projects on track.
Contact us today for a price quote on the products your project requires and let us help you enhance your supply chain diversity.