News | April 17, 2020

Diversified Supply Chains: Aggregation vs. Consolidation

Supply Chain professionals understand the benefits of a diversified supplier base – it allows for favorable pricing through market competition, risk mitigation of supply chain disruption as well as access to a diversified product offering and flexibility on lead times and delivery.

Ways to diversify your supply chain:

  • A mix of larger and smaller suppliers – smaller suppliers tend to be more adaptive to change and nimble, while larger supplier may be viewed as more reliable and are more prepared to withstand economic hardship.

  • Geographic – Mitigate risks of physical supply chain disruptions caused my political events, natural disasters, economic conditions, etc.

  • Multi-Sourcing – purchasing the same goods from a handful of suppliers, a great strategy to mitigate supplier capacity risk

Supply Chain Diversification is a good thing, but it comes with its challenges.

Granular and diverse procurement strategy means understanding culture, dealing with time zones, tracking fulfillment and logistics and managing many payments. These challenges often push buyers towards consolidation or outsourcing to solve for inefficiencies in vendor management.

Vendor Management does not mean that your procurement team has to work with a handful of larger suppliers through consolidation. It’s about finding solutions to the pain points in the procurement process and reaping the benefits of the long tail/diversified supplier base. Using a streamlined, organized Supply Chain Management process, buyers can optimize cost of goods and mitigate supply chain disruptions. This aggregation leads to efficiency, cost savings and profitability.

Harbor’s Supply Chain Finance program includes vendor management tools to deal with a diverse supplier base, at the same time it optimizes and harmonizes payment terms with these suppliers to provide liquidity to both buyers and suppliers alike.

With the intuitive HarborTrade platform buyers can:

  • Improve communication with Suppliers
  • Issue Purchase Orders
  • Track Fulfillment
  • Reduce discrepancies in PO/Invoicing
  • Improve liquidity across supply chain

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