Five Ways to Strengthen Supply Chains via Alternate Sourcing
Procurement leaders are rethinking supplier strategies amid inflation, trade shifts and economic uncertainty.
A new Supplier.io report, based on insights from 398 companies with a combined US$168bn in supplier spend, outlines five key practices for securing alternative sources.
āInflation, geopolitical shifts and evolving economic policies continue to disrupt traditional supply chains,ā asserts Supplier.io CEO Aylin Basom in the report.
āYet, forward-thinking leaders see opportunity in this environment. They are using this time to strengthen their foundation, better manage risk and create lasting business value.
āThe organisations thriving today arenāt just reacting to changes, theyāre redefining how they source.ā
1. Taking action in an uncertain market
With so much volatility, some leaders are tempted to wait for stability before making decisions.
However, proactive organisations see uncertainty as an opportunity to strengthen supply chains. They are already implementing changes, aligning their strategies with current challenges.
Supplier.io suggests refining messaging and engaging suppliers early.
Supply chain costs and risks are top concerns, meaning leaders are highlighting the benefits of using local, small and diverse suppliers to improve resilience.
Meanwhile, procurement specialists warn against delaying action. Many business units do not realise how many local suppliers are available. Responsible sourcing teams are already identifying at-risk supply categories and discussing solutions with smaller suppliers.
One Supplier.io poll shows that 54% of procurement professionals have either not acted on market changes or are still working out a strategy.
In contrast, 46% are already developing new approaches with key stakeholders. The Hackett Group also reports that while 64% of organisations consider supply chain resilience a priority, few have proactively diversified their supplier base.
2. Spotting vulnerabilities & 3. leveraging existing suppliers
Trade policy shifts, such as tariffs affecting Mexico and Canada, could disrupt supply chains in the US.
- More than 120,000 engine part manufacturers, including machine shops (66,000), precision manufacturers (29,000) and transmission providers (40,000).
- More than 100,000 food suppliers, including fruit and vegetable growers (44,000), meat producers (44,000) and dairy providers (11,000).
- In excess of 100,000 electronic component suppliers, 150,000 computer and storage device manufacturers, and 114,000 semiconductor providers.
Many companies are already working with small and diverse suppliers.
Supplier.io analysis shows that, on average, organisations engage with 537 such suppliers. These vendors are already familiar with business operations, making them easier to scale up without lengthy onboarding processes.
In total, 398 Supplier.io customers spend more than US$168bn with more than 214,000 small and diverse US suppliers.
"There is a flight to stability,” adds economist Laura Boyd. “Corporate leaders are focused on delivering top line growth. This means predictability, visibility into coming quarters and years in a modestly improving economy.
“Any shock to your performance as a company is viewed as a company-specific issue. I can't overstate this enough.
“Management teams are really focused on delivering performance, growth and stability in this period. Lowering risk of supply chain interruptions is paramount."
4. Using data to drive sourcing decisions
Procurement teams must do more than identify new suppliersāthey need to provide business units with clear, data-backed insights on cost, risk and resilience.
Yet, a Supplier.io poll found that 34% of procurement professionals either do not know where to start or have not begun engaging with their business counterparts.
Among those who have taken action, 7% are directly involved in shaping sourcing strategies with business leaders, whilst 25% regularly meet with stakeholders to align procurement with broader company objectives.
This level of engagement helps demonstrate the value of alternative sourcing strategies.
5. Expanding the search for suppliers
Supplier.io's database includes more than 10 million small, local and diverse suppliers across nearly every industry. Businesses looking for alternative sourcing must avoid the assumption that small suppliers lack the capacity to meet their needs.
According to Supplier.io, organisations taking a proactive approach are:
- Creating supplier heat maps: Mapping available suppliers in key regions and sharing insights with business leaders to highlight new sourcing opportunities.
- Using data for supplier selection: Going beyond basic supplier lists to assess candidates based on industry experience, business longevity and existing customer relationships.
- Supporting supplier growth: Some suppliers need time to scale up. Companies are helping them build capacity through initial small contracts, supplier development initiatives or external support from groups like the Small Business Administration and NMDSC.
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