Focus on supply chain diversification to minimize the risks of product recalls or supply disruptions.

1. Crescendus™
Tip of the Day: June 22, 2016
© Crescendus™ 2016. All Rights Reserved.
www.crescendus.com
SUPPLY CHAIN DIVERSIFICATION
There are limits to just-in-time and concentrated supply chain strategies. Don’t ignore
the potential impact of supply disruptionson your customer base and your reputation.
While concentrated supply chain strategies may provide near term scale/volume
related benefits,it also comes with amplifiedrecall risks and also your product
roadmap tied to the viability of select vendors. We recommend diversifyingyour supply
chain and not providing business to any vendor that exceeds 15-20% of your product
portfolio. This will allow you to balance your risks and promote healthy competition
between your vendors. In addition,do not concentrate all your vendors in the same
geographic location. Make it a priority to distribute your supply chain across vendors
and geographies, and always leave approx. 10-20% of your capacity open for new
vendors.