Case Study: How Should We Diversify Our Supply Chain?
Chinese appliance maker Kshore is considering realigning its supply chain in response to the disruptions caused by Covid-19. Pressure from customers such as Walmart has led the company to look for ways to reduce time, expense, and environmental impact of shipping goods. Kshore's CEO and COO visited factories in Monterrey, Mexico, impressed by their professionalism. However, transportation and staffing concerns have made the executives hesitant to start production in Mexico. The company is now considering other countries as well.
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Frequently Asked Questions with Answers
Case Study: How Should We Diversify Our Supply Chain? - HBR.org Daily
1. Why is diversifying the supply chain important?
Diversifying the supply chain is important because it reduces heavy dependence on one medium or supplier, which can help mitigate risks and disruptions in the event of a crisis or unexpected event.
2. How can we diversify our supply base?
One way to diversify the supply base is by identifying critical partners and assessing their resilience. This can help determine how much diversification is needed to create a more resilient supply chain.
3. What are the benefits of diversifying the supply chain?
Diversifying the supply chain can lead to increased resilience, reduced risks, and improved efficiency. It can also provide access to new markets and opportunities for growth.
4. What strategies can be used to diversify the supply chain?
There are several strategies that can be used to diversify the supply chain, such as sourcing from multiple suppliers, exploring alternative sourcing locations, implementing vertical integration, and adopting new technologies.
5. How can diversification of the supply chain contribute to success?
Diversification of the supply chain can contribute to success by reducing vulnerabilities and disruptions, improving agility and responsiveness, and providing a competitive advantage in the marketplace.
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