The trend of Supply Chain Diversification refers to the reconfiguration of the supply chain to broaden the supplier ecosystem and expand manufacturing and distribution networks, with the aim of increasing resilience, agility, responsiveness, and competitiveness. This trend encompasses related concepts like multisourcing (partnering with multiple competing suppliers) and multishoring (selecting providers in more or different countries or regions).
Globalized supply chain networks have given a tenfold boost to worldwide merchandise trade volumes since 1980, exceeding 28 trillion USD in 2021. In recent years, patterns of protectionism, intense natural disasters, and infrastructure congestion, as well as the Covid-19 pandemic and geopolitical crises, have collectively pressured organizations to adjust their supply chains, embarking on a new path of resilience rather than receding from the global stage.
Many industries have already begun the realignment of sourcing practices, manufacturing footprints, and distribution networks to maintain service levels and exploit regional cost differences in labor, materials, energy, and more. For example, Taiwan Semiconductor Manufacturing, the world’s leading silicon wafer foundry, announced plans to build a 12 billion USD plant in Arizona to serve its customers in the US, while Mazda has shifted production of some auto components from China to Mexico.
The trend of Supply Chain Diversification will have high impact on logistics operations, from connecting new regions upstream to changing existing transportation modes. However, the realization of such a trend will not be immediate. While some aspects could be implemented in a few weeks, like contracting with a redundant carrier, the larger components of Supply Chain Diversification – those with the greater benefit to resilience, like building another factory closer to a consumer market – will require years to come to fruition.