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An opinion piece by Shirell James, Vice President of Supply Chain Advisory, Blue Yonder
The EU’s proposal to promote sourcing from multiple suppliers highlights an important shift: supply chains are no longer just a logistical back-office issue, but strategic assets whose resilience is crucial for business continuity and economic stability. Measures to encourage supplier diversification can be a useful tool for strengthening supply chain resilience and mitigating the risk of disruptions while reducing the potential weaponization of trade. Such measures are most effective when implemented as part of a broader, capability-focused approach.
Supply chain resilience stems from transparency, measurability, and operational readiness throughout the entire value chain. To strengthen this, companies should map their supplier networks comprehensively, including upstream suppliers and raw material sources, identify nodes with increased risk, and quantify the potential financial and service-related impacts of disruptions. This enables companies to set realistic recovery targets for critical items, prioritize risk mitigation measures that provide measurable benefits, and make decisions regarding changes in inventory, procurement, or logistics based on a clear business case.
Practical measures that promote sustainable resilience include ongoing transparency along the supply chain, scenario-based stress testing, clear cross-functional governance, and investments in decision-support solutions that highlight risks in near real-time. Operational strategies such as multi-sourcing, strategic inventory placement, nearshoring, and alternative materials are all sensible measures, but their effectiveness depends on whether they significantly reduce risk relative to cost.
Many systemic risks lie beyond the top level: even multiple designated suppliers can rely on the same raw material sources, processing sites, or transport bottlenecks. China’s control over the supply chains of critical graphite and battery materials illustrates this challenge. Beijing’s export controls on natural flake graphite, synthetic spherical graphite, and key anode materials demonstrate how multiple suppliers can still depend on the same upstream source. Diversification at the top of the supply chain does not eliminate concentration risk further down.
It is essential to recognize and address these upstream dependencies. Equally important is the ability to act quickly in the event of disruptions, as prompt detection and resolution can significantly reduce losses. Both public and private actors must contribute here. Improved market transparency, industry-wide data sharing, and targeted government support for critical inputs can complement companies‘ efforts and enable more effective large-scale risk management.
This could include measures such as shortening response times in the supply chain—a practice already well established in the pharmaceutical industry, where supply continuity is ensured through structured emergency planning and rapid escalation protocols. It could also involve assessing the financial impacts of specific risk events and developing tested crisis manuals that involve all stakeholders throughout the supply chain.
In short: supplier diversification is a positive step, but it should be part of a holistic, data-driven risk management framework that prioritizes transparency, measurability, preparedness, and rapid response. These capabilities—and not a single rule—make supply chains truly resilient and should remain the primary goal for companies looking to build long-term resilience.
