Two suppliers are not a backup plan if both depend on the same factory. Build a one-page recovery sheet for your most critical item before buying extra stock or moving production.
Practical frameworks are editorial recommendations. All worked examples are hypothetical, not client results. Confirm transaction-specific legal, tax and safety requirements with a qualified professional.
1. Find the dependency that can stop production
Start with items whose absence would halt a line, breach a customer commitment or require lengthy approval of a substitute. Rank by disruption impact, not annual spend alone.
- Record the item, approved supplier, production site, critical upstream input, transport route and substitution approval time.
- Ask backup suppliers about shared factories, sub-suppliers and ports. Different company names do not prove independent capacity.
2. Compare recovery time with usable stock
Estimate how long an alternative needs for approval, production, transport and receiving inspection. Compare that recovery time with the days your usable stock can cover demand.
Worked example
Illustrative example: 600 usable units at 30 units per day cover 20 days. A qualified alternative requiring 28 days leaves an 8-day gap. Earlier activation, a faster route or additional usable stock must close that gap.
3. Diversify the failure point, not just the address
The OECD’s 2025 review finds that relocalising supply chains does not consistently improve resilience in its modelled scenarios. Our operational takeaway: assess shared failure points before assuming a nearby supplier is safer.
Source: OECD: Supply Chain Resilience Review (2025)
- Qualify the alternative with the same specification, production-representative samples and a pilot order; retain the inspection evidence.
- Compare total delivered cost, independent capacity and recovery time. Treat a supplier contact as unqualified until these checks pass.
4. Write a trigger and rehearse the decision
Replace “monitor closely” with a decision rule. For example, escalate when a confirmed production milestone slips beyond the time remaining to activate the alternative.
- Name the purchasing decision-maker, approved emergency budget, supplier contact and person responsible for customer updates.
- Run a tabletop exercise: remove the main supplier, calculate the gap and test the switch. Track uncovered days and actual alternative lead time.