Supplier Diversification: More Critical Than Ever

In our interconnected global economy, businesses face many risks that can disrupt their operations, from import/export backlogs to geopolitical tensions to Mergers and Acquisitions (M&A)-linked strategy shifts. One crucial strategy for mitigating these risks is vendor diversification. Vendor diversification involves spreading your business across multiple suppliers rather than relying heavily on a single point of failure.

Trends Driving the Increased Risks

Why is vendor diversification critical at this moment?

Exposed Holes in Global Supply Chain

Supply chain risks come in various forms, including supplier bankruptcy, quality issues, production delays, and transportation disruptions. The 2020’s have been defined by incidents that expose the weak links in our global supply chain — from COVID to conflict, to rapid inflation. These challenges let it be known that what globally connected economies share in success, they also share in struggles during times of trouble and blowback. While your specific vendor may appear strong, your vendor’s vendors may be facing tumultuous challenges — creating a house of cards. While vendor quality measures and monitoring may help alleviate risk, it is impossible to be 100% certain that a vendor will be able to achieve their business plans when faced with unforeseen outside challenges.

Damaging Business Shifts with Rapidly Changing AI Strategies  

“Adapt or Die” is a saying often tied to large transformational shifts, both cultural and economic. The AI revolution is one of the most prominent shifts of our time. With the AI revolution/disruption, more and more businesses are aggressively changing their operating strategies to adapt to an ever-changing landscape — investing in technologies, reducing headcount, and automating processes. With change and evolution come risks. AI — like any technology — has risks of being utilized well or poorly; it can be helpful or detrimental. There is no doubt that some businesses choosing to chase this AI transformation will suffer from inadequate planning and poor execution. Your suppliers and your supplier’s suppliers are adapting, some of those adaptations will fall flat and the ripples of those failures may impact your business.

Mergers and Acquisitions Disruptions 

M&A continues to shape the global business landscape, especially in technology-focused industries. The influx of private equity and the continued shift to “as-a-Service” (aaS) based product/pricing models have led to an increase in companies drastically shifting their Sales, Product, and Delivery strategies — with these transformations often taking place in line with large acquisitions and/or divestitures. In 2023 and 2024 we saw an increase in companies that:

• Dissolved their partner network — choosing to move Sales and Delivery to more direct models.
• Increased pricing well above inflation or Consumer Price Index (CPI) rates.
• Executed drastic changes to their order/contract cycles.

These extreme shifts impact business, with customers often seeing increases in internal and external costs (OpEx and CapEx) and decreases in service levels and quality.

Mitigation Strategies

Now that you know the increased risks, what can you do? Here is a quick checklist to help mitigate risks:

1. Diversify your vendor network.
   • Do not only rely on OEMs. Lean on partner and third-party companies.
   • Diversify the size of your vendors. Have a good mix of large conglomerates, trend-setting mid-market companies, and hyper-focused small businesses. Each type of operation is subject to different risks, and having a healthy mix protects your interests.
2. Choose technologies that have strong networks.
   • When choosing a solution, pick platforms that are widespread in the market and avoid niche/custom platforms.
   • Choose technologies that have large partner and third-party B2B networks.
3. Avoid overspending in non-priority areas.
   • Identify the areas of IT where a top-level investment is most critical to the success of your company. For anything that does not make that list, you have an area that is ripe for savings and vendor flexibility.
4. Monitor and audit your vendors.
   • Establish a vendor internal auditing program.
   • Arrange visits to vendor sites to prove their capabilities.
   • Demand Quarterly Business Reviews.

Curvature as a Partner 

Curvature is here to help guide you and your company on its IT journey. Our experienced Sales Representatives and Sales Engineers guide thousands of companies through the turmoil discussed in this article. Our team is informed and up-to-date on IT trends, Market Shifts, and OEM strategies.

Through our expertise, partnerships, and core offerings, Curvature is unique, and we pride ourselves on solving problems for our customers. Your Curvature rep will guide you through the process of:

1. Exposing strategies of where and when to use Curvature to achieve large savings.
2. Clearly identifying where Curvature is not the ideal fit and guiding you to other options.
3. Understanding your entire IT needs, not just hardware. Your Curvature rep can speak to and link up strategies/partners around: Design, Budgeting, Third-Party Maintenance, Professional Services, Managed Services, and Asset Disposition.

Get started today by contacting us here.