
Dimensions

Supply chain diversification can entail everything from simple tweaks in specific links to major reconfigurations of entire global networks: It’s not an all-or-nothing proposition.
It is important to emphasize that every supply chain is unique. The four-dimensional model described here is designed to help companies understand their current setup, navigate all available options, and develop an approach tailored to their requirements. Each dimension can be scaled up or down to achieve the appropriate level of diversification.
This versatile model can be applied to specific product supply chains, complete supply chain networks, and entire business units or markets. It facilitates the assessment process and the development of both tactical and strategic scenarios.
Dimension 1: Multi-shoring the Supply Network

The first dimension involves geographical diversification. Multi-shoring means introducing redundant manufacturing capacities or additional supplier locations in separate areas. This might include adding locations in other countries or even continents to mitigate operational, compliance, or reputational risks. Multi-shoring can involve the same supplier but from an additional location – for example, getting the same part from two different plants.
The spectrum of multi-shoring diversification ranges from a supply network built on one country (low) to one widely dispersed across multiple countries or even continents (high).
Dimension 2: Multi-sourcing the Supply Network

The second dimension focuses on quantity rather than geography. The most common approach involves adding redundant suppliers, although integrating additional manufacturing capacities is also standard practice. Diversification can take place within local or regional ecosystems, such as adding a new supplier located in the same city. Multi-sourcing is primarily used to mitigate financial or operational risks, such as a supplier’s inability to deliver on time or at all.
The breadth of a company’s supply network can range from having a single supplier for a specific part or product (low) to maintaining multiple suppliers on multiple tiers for each part or product (high).
Dimension 3: Adding Transport Modes

The third dimension centers on utilizing more modes of transport for the trade lane of a particular product or part. Adding at least one transport mode to any part of the supply chain (first mile, long haul, last mile, etc.) makes a supply chain more diversified than it was before. Modes include air, ocean, rail and road. Simultaneously, using various modes of transport or multi-modal solutions for a part or product also typically diversifies shipping routes, which can reduce operational risk and buffer volatilities in demand. It’s important to note that adding modes of transport is not a contingency plan but rather a parallel transportation method for the same point-to-point connection. Furthermore, different modes of transport offer varying lead times, which must be considered and aligned with the business model.
Mode diversification spans from one mode for each part or product (low) to parallel modes for each part or product (high).
Dimension 4: Diversifying Logistics Operations

The final dimension of supply chain diversification involves expanding logistics capabilities. This means augmenting the logistics infrastructure with additional capacities, such as hubs, warehouses, and distribution centers. Depending on the requirements, this could include redundant logistics capabilities in other locations both near and far. Diversifying logistics operations may also involve outsourcing certain logistics activities. Like multi-shoring and multi-sourcing, a diversified logistics operation provides alternative options that maintain continuity in the supply chain during disruptions.
The spectrum of logistics operations diversification ranges from a single logistics operation for a specific need (low) to multiple redundancies across diverse geographies (high).
This latest DHL Trend Report underscores our aim to be at the forefront of supply chain trends, empowering our valued customers and businesses across all industries. It provides the latest research, our industry expertise, guidance and logistics solutions needed to bolster resilience, drive agility, improve sustainability and ultimately grow their competitive advantage.
Dr. Klaus Dohrmann, Vice President and Head of Innovation and Trend Research at DHL Customer Solutions and Innovation
Do you have a diverse supply chain? Explore the different ways global companies have diversified their supply chains.