Navigating Diversification Challenges

Congratulations on reaching this point and recognizing the strategic importance of supply chain resilience.

As you plan your next steps, it's important to acknowledge that supply chain diversification is a complex, long-term process where true success is measured in years, not months. From selecting the right SKUs and target markets to managing suppliers in regions where you lack on-the-ground infrastructure, numerous challenges must be navigated before the full benefits are realized.

Having worked with hundreds of SMEs and publicly traded companies, we’ve identified common stumbling blocks and strategic missteps. By learning from these challenges, you can increase your likelihood of achieving successful diversification.

Market Selection

For thirty years, China has worked to streamline the sourcing process with the U.S. Sales personnel rarely declined to quote projects, messaging apps enabled near-instant communication, staff routinely worked six or seven days a week, and a single market could support both component and raw material supply chains. Meanwhile, an extensive network of deep-sea ports and fast shipping routes ensured goods reached the U.S. at ever-increasing speeds.

With most companies' import experience centered on China—and in some cases, Mexico—it’s easy to assume that emerging markets offer similar capabilities, competitiveness, and business cultures. However, this couldn’t be further from the truth.

China’s vast manufacturing base, supported by a workforce of 1.4 billion people, cannot be easily replicated by any single market. At least for now, companies seeking to diversify their supply chains across multiple product categories must navigate a mosaic of smaller, regionally specialized markets.

Avoiding Common Pitfalls

Many companies that could successfully diversify their supply chains often stumble due to a reactionary mindset. Those that wait until tariff hikes take effect frequently find themselves with limited time to execute their diversification strategies, making decisions under pressure from board members and investors while racing against rising costs.

The best way to avoid this scenario is to proactively manage tariff and trade risks before major disruptions occur. However, for companies already struggling to navigate these challenges, understanding common pitfalls can provide valuable insight. Adjacent are some of the top internal reasons why firms fail to diversify their supply chains:

What to Expect?

Now that you’re aware of the common pitfalls in diversification efforts, you can take the necessary steps to prepare effectively. But what should you expect when you begin approaching and qualifying suppliers in emerging markets?

Allocate 90-220 hours over 3-6 months for supply chain personnel leading diversification efforts.
Expect limited online resources for identifying potential suppliers.
Plan for slower response times and longer product development cycles compared to China.
Don’t assume significant cost savings, even in markets with lower labor rates.
Be prepared for substantially longer production lead times than in China.

Using The ABC Group to Reduce Diversification Time & Cost

Despite the best intentions, some companies simply lack the bandwidth or resources to successfully execute a diversification program or manage ongoing supply chain operations in emerging markets.

For those seeking expert support, The ABC Group provides a proven, cost-effective approach to quickly onboarding suppliers in emerging markets—an approach trusted by leading brands.

Click below to learn how The ABC Group can help you achieve your supply chain diversification goals.

What is Supply Chain Management as a Services (SCMaaS)?

SCMaaS is an asset-light model offering scalable, tailored supply chain staffing and advisory services across multiple foreign markets, ready for immediate implementation and requiring no capital expenditure.

How does SCMaaS help my business?

SCMaaS offers tailored benefits based on client size, growth stage, and strategic goals. Common advantages include: enhancing supply chain visibility with near real-time data, driving supplier improvement initiatives, accelerating new product development, opening new foreign markets, implementing Standard Operating Procedures to support scaling, and alleviating domestic bandwidth constraints.

Can SCMaaS integrate into our existing business processes?

Yes, our SCMaaS model seamlessly integrates with your current workflows and SOPs, ensuring minimal ramp-up time and a smooth transition for your supply chain team. Additionally, SCMaaS staffing resources can complement your existing foreign team, helping you expand capabilities without the need for direct hires.

What is the cost associated with SCMaaS?

SCMaaS costs are based on the number of personnel a client uses, the number of markets covered, and the complexity of their supply chain operations. While costs vary depending on the client, our clients typically experience SCMaaS costs that are 20-30% lower than traditional asset-heavy models, such as operating a foreign sourcing office.

Moreover, the enhanced supply chain performance associated with our SCMaaS model often results in significantly greater savings beyond the initial cost reduction.

How can I start with SCMaaS?

Your supply chain is the lifeblood of your business, and we take that responsibility seriously. To learn more about SCMaaS and how to get started, contact us to schedule a consultation where we’ll get a better understanding of your supply chain goals and needs.

Supply Chain Resilience