Over the last few years, it’s felt like the only consistent pattern we’re seeing across supply chains and procurement is inconsistency.
From supply disruptions throughout the COVID-19 pandemic in 2020, all the way through geopolitical unrest in Ukraine and, more recently, Iran, it’s been a struggle to stay on top.
Demand and growth haven’t slowed down, however. There has been no waiting for the storms to clear before forging a path forward. The organisations which are seeing continuous success are those who have learned to navigate the volatility. How? Let’s explore:
“CEOs who wait for the uncertainty to clear risk falling behind peers who seize opportunities emerging in new markets or trade corridors and build new sources of competitive advantage.” – McKinsey, May 19th, 2026
Supplier Diversification
One tactic to circumvent the negative impacts of supply chain unpredictability is diversification.
The theory, simplified, is that by monitoring the impact of geopolitical events as they arise, and understanding the true capabilities of your suppliers (specifically where they may fall short of demand or be negatively impacted by outside influences) opens opportunities for strategic diversification. Essentially, suppliers in different geographical locations, situated so that regardless of what goes on in the world, your business continues to be supplied with the goods necessary for sustained operation.
The obvious positive here is that your organisation is protected and prepared ahead of unexpected developments. The drawback is that diversification increases the volume of suppliers to manage, which exposes vulnerabilities if your supplier management processes are underdeveloped or under-supported. Risks creep in as supply chains grow more convoluted to strategically avoid upheaval.
“Only 42 percent of global supply chain executives say they understand the operations of suppliers below the first tier.” – McKinsey, May 19th, 2026
Having a provable understanding of suppliers’ operations is no longer a ‘nice to have’. Regulatory bodies like the EU have long-since introduced directives like CSRD and CSDDD, aiming to highlight and introduce sustainability reporting regulations for companies based and operating within the EU. It has, since its inception, been somewhat declawed and delayed – but it would be unwise to assume this means sub-tier suppliers are free from scrutiny. It’s a matter of when, not if, and it recalls the adage ‘prevention is better than cure’.
The good news for supply chain and procurement teams who are managing complex supply chains or a large volume of suppliers is that support is available.
Nearshoring
“Fewer than 8% of firms report full control of their risk exposure, even as the majority continue to absorb higher-than-expected losses.” – procurementmag.com, June 29th, 2026
Another tactic is the opposite approach to diversification – rather than extending supplier reach, suppliers are strategically chosen for their geographical closeness to your main base of operations. Nearshoring (or onshoring) is the conservative approach. It shortens the supply chain, reducing geopolitical exposure, and means you can keep a closer eye on those suppliers.
Qualification may be easier, as well as supplier auditing, as it can generally be understood that suppliers who are operating in your geographical region must adhere to the same regulations which you do, unlike those based on far-flung shores.
Of course, this isn’t a perfect strategy. Some supplies cannot be sourced from your geographical region, and therefore you must open yourself up to risk to continue operations. You are also beholden to the economic viability of your nearshored suppliers – if they struggle to meet demand, and you have no alternative available, you are also economically impacted.
If your organisation or overseas incorporated company is premium-listed on the London Stock Exchange, the effectiveness of your material internal controls (including supply chain management, ESG disclosures, GDPR and much more) is particularly subject to scrutiny. Provision 29, part of the UK Corporate Governance Code 2024, is a significant governance requirement for companies who qualify, and it has officially become effective from the 1st of January 2026.
This kind of reporting mandate has a trickle-down effect through procurement teams and the suppliers they are sourcing, requiring much greater transparency and due diligence to avoid gaps in mandatory governance.
“Crucially, close supplier relationships matter. During a disruption, valued customers may receive prioritised orders, earlier warnings, and greater flexibility.” – Mark Dewar, Dara Burns, charlesrussellspeechlys.com, 7th May 2026
As is always the case, supplier visibility and the accuracy of the data you have collected from them has an impact which cannot be overstated.
The Paradox at Play
Herein lies the paradox: diversify your suppliers to avoid the roadblocks of geopolitical unrest, and exponentially increase the risks associated with complex supply chains. Nearshore your suppliers and risk placing all your metaphorical eggs in one basket.
Which approach do you choose? Both come with their own risks. Neither can fully protect you from the effects of the modern supply landscape. No matter the choice, regulations like CSDDD and Provision 29 require consideration and compliance if your organisation falls within their scope.
In the end, it matters less which approach you choose and more how you manage your suppliers within either of the approaches. The difference in success will hinge entirely on the qualification, negotiation, on-boarding, and contract management processes you employ. The pillars of good supply chain management and procurement follow a distinct framework:
Tender/Negotiate
Source suppliers effectively, understand what you need from them and ensure they understand the same. A layer of due diligence is applied at the beginning of the supplier relationship, safeguarding your organisation with the assurance that any pre-requisites have been passed at the first hurdle.
Example – You require suppliers to hold a Science-Based Target, which you have specified in your tender, to better meet requirements from regulatory bodies you submit information to. Use a trusted technology layer to assess suppliers’ suitability or formulate supplier data in a way which is easy to evaluate.
On-Board/Manage:
Another layer of due diligence is applied at the supplier on-boarding stage, and it’s here that you can apply a fine-toothed comb, double-checking claims and certifications, leaving no stone unturned.
Example – Palm oil is one of the restricted commodities under EUDR. Ensure suppliers have an RSPO certification, or do not use palm oil in their supplied products, to ensure compliance within your own organisation.
Contract:
Take the time to draft protective clauses with suppliers and bake-in compliance terms in writing. Loop in legal teams to provide support and confirm a professional once-over.
Example – Build a process which automatically includes the legal department, and any other internal departments which require approval over supplier contracts, to both speed up contract management and ensure proper reviews have taken place prior to signing.
The thread which runs through all these activities, in the end, is simply relationship management. Your ability to communicate openly with suppliers, to have their data at a glance, to gain deeper understanding where necessary, is the factor which separates excellent procurement teams from those just scraping by.