Diversifying supply chains in a post-pandemic world

Megan Bray November 30th 2021 - 4 minute read

The COVID-19 pandemic has thrown a harsh spotlight on the issues businesses face when trying to establish a secure supply chain. Factory and business lockdowns, raw material shortages, a lack of logistics personnel and even the misadventures of a single container ship have compounded to create long-term supply chain issues that may well persist into 2022.

A supply bottleneck can lead to less choice for customers, whether that’s the individual at the supermarket choosing lettuce or a car manufacturer trying to source parts. Your business needs to be able to get the goods you need and deliver them at a price the customer expects.

Having to absorb these costs can seriously hinder business growth. A lack of raw materials can mean the lowering of profit outlooks and cutting production targets, and the rise in logistics costs have led companies to turn to costlier options as they try to avoid blocked ports.

It has become more important than ever that your business has a resilient and well thought-out supply network. Businesses can no longer stay anchored to China in the current economic landscape and continue to deliver the best service to their customers.

Expanding Your Supply Base

A crucial first step for businesses is expanding your supply base. Many businesses currently base their production in China, and with good reason; the country has a healthy network of suppliers, a dedicated workforce, and excellent transportation infrastructure. Whilst maintaining a presence in China is certainly necessary for the foreseeable future, businesses need to look outside this one market.

Moving production closer to home is one effective way to diversify your supply base. Whilst reducing the geographical distance between you and your product may seem like a straightforward move, the benefits can be more than just a shorter drive for your logistics partners. Some trading blocs and governments are offering substantial investment for companies that choose to produce goods domestically. The US government for example announced plans earlier this year to support the manufacturing of semi-conductor chips within the country with a $250 billion investment.

Whilst establishing production centres in new international locations can come with its own costs and logistical issues, Forward Contracts can be used to help establish a currency flow in a new location. Forward Contracts from Currencies Direct give you the confidence of guaranteed rates and accurate forecasting of potential currency movements, allowing you to provide a predictable cash flow when you need it.

Create a Logistics Network

Diversifying your supply base is a great first step but it raises a further question; how will your business overcome the logistics issues that continue to bite? One option is to create a collaborative network with your existing logistics partners, or by finding new ones that best fit your business’ needs.

Many logistics companies have seen rising costs in 2020/21 due to increased demand and staff shortages, and a lack of visibility in supply chains has harmed the ability for businesses to collaborate effectively. A report by the International Finance Corporation states that there is a clear correlation between wage growth and the performance of the logistics sector, and demonstrates how necessary the sector is to economic growth.

Through establishing a logistics network, you’ll be able to identify any problem areas and add new logistics partners accordingly. Diversifying your supply chain in this way can reap significant benefits, but will bring additional complexity to your business’ operations. Currency Direct’s Multiple Payment Solution is fast, effective, efficient, and most importantly allows you to expand your reach to over 120 countries.

Embrace New Technologies

Diversification of your supply chain can also bring ample opportunity to make major improvements to your business’ processes. New technologies are already changing how businesses operate and are helping to increase a business’ efficiency.

Automation is a key technology to consider. The cost of automation, whilst still high, has fallen over the past 30 years by around 50% and the savings it can generate are potentially substantial. Advances in computing power and robotics technology mean that business integration is easier and that robots now have increased capabilities, especially in regards to manufacturing.

Robotic palletizers for example allow for significant supply chain diversification, as they enable companies to move away from the more traditional model of key production facilities and embrace a more geographically diverse network. The reduction in labour expenses that automation brings also means that production can be moved to higher-cost countries, potentially diversifying a supply chain even further.

Introducing automation into your business does still come at a cost however. As supply chain diversification opens up new markets it’s important to use the payment provider that best fits your business’ needs. Currencies Direct are able to offer solutions tailored to each client, working with their wide network of partners to ensure that any risk to your money is carefully managed.


As global supply chain issues continue to lower profits and slash production it’s more important than ever to move your supply base away from centralised production. With incentives potentially offered to businesses as they move production closer to home and clear logistical advantages, it may well be worth diversifying your supply base in order to benefit your supply chain.

To support this geographical diversification, it’s also essential that you establish a resilient logistics network. Working directly with logistics partners can help to highlight any weaker areas in your supply chain, thereby opening up opportunities to expand your logistic network with new partners.

A re-examination of your business’ operations is also helpful in discovering processes that can be improved through new technologies. Automation can open up a wide variety of options when it comes to expanding your production locations, as technologies such as robot palletizers can allow you to grow without being reliant on a local workforce.

It’s clear then that supply chain diversification is not only vital in helping your business move away from centralised production, but also that there are clear steps that can be taken to start your business down the right path.

Written by
Megan Bray

Select a topic: