One supplier is located in Asia, the other in Europe, yet the same disruption can cripple both simultaneously. The crucial factor is whether both locations are connected to a common point in the system, such as a sub-supplier, a transport route, or a raw material source, regardless of the distance between them.

Geographical distance does not necessarily equate to independent risks. What appears on paper to be a diversified procurement network can, in practice, still be characterized by the same structural dependencies explained in this blog post.

In this blog you will learn:

• Why multiple suppliers alone do not create true risk diversification

• How shared dependencies on transport routes, regions, or raw material sources make supply networks vulnerable

• How Near-Scoring evaluates suppliers based on proximity, responsiveness, and structural independence

• Why regional alternatives strengthen resilience without completely replacing global suppliers

  
  

Why more suppliers don't necessarily mean true diversification

The impulse to spread risk by using more suppliers is obvious, because if one supplier fails, another steps in. However, this logic only works if the alternatives are truly independent of each other. In practice, many seemingly separate risks correlate more strongly than they initially appear.

A closer look reveals such shared dependencies at various points in the supply network. For example, two suppliers in different countries might export through the same port. Similarly, two regions might depend on the same trade agreement, meaning that a political change could affect both simultaneously. Furthermore, different suppliers may use the same freight corridors, border crossings, or critical infrastructure.

In addition to these structural connections, a supplier's operational accessibility also influences the network's resilience. As distance increases, transport routes often lengthen, while at the same time higher buffer stocks may be required and short-term responses to disruptions become more difficult. Significant time differences can also delay operational coordination if decisions cannot be made within the same working day.

A supplier on another continent may be cheaper under normal circumstances, but in a crisis, they extend precisely the timeframe that an organization can least afford to lose. This brings two key questions to the forefront regarding the resilience of a supplier network:

• How independent are the default risks of the suppliers from each other?

• How quickly can the company switch to an alternative in the event of a disruption?

  
  

Near-scoring as an evaluation model

Near-scoring addresses precisely these two questions. Existing and potential suppliers are evaluated not only on price and quality, but also on how quickly they can be reached by the company and how independent their risk profile is from the rest of the supplier network.

The evaluation typically includes two overarching perspectives: the supplier's operational proximity to the company and its structural independence from other suppliers in the portfolio.

From these perspectives, various evaluation dimensions can be derived:

• geographical distance and transport time to the respective production site,

• Dependence on shared logistics corridors, ports or border crossings,

• geopolitical stability of the region and vulnerability to trade restrictions,

• Time zone compatibility for operational coordination in case of disruption,

• Regulatory proximity, for example through common standards or trade agreements, which facilitates deliveries in times of crisis

  
  

The added value of the model lies less in an isolated metric than in the combined consideration of these dimensions across the entire supplier portfolio. A portfolio can appear formally diverse and yet be heavily concentrated on a few common risk factors. Only the combined assessment reveals which suppliers, despite their different locations, are exposed to the same structural risks.

How near-scoring changes a supplier decision

The following example shows how this perspective affects a specific supplier decision.

Imagine a manufacturer sourcing a product from two suppliers, one in East Asia and one in Southeast Asia. At first glance, this setup appears to meet the dual-sourcing requirement. However, a near-scoring analysis reveals that both suppliers export via the same shipping corridor, are affected by similar seasonal weather risks, and have comparably long transit times. Thus, the structural risk largely remains, even though there are formally two suppliers.

Based on this insight, the company is strategically expanding its portfolio. It is qualifying a third supplier in a region closer to its own production site and with independent logistics. This third supplier is initially more expensive in a direct unit cost comparison. However, once shorter transport times, lower buffer stocks, and faster response times in case of disruptions are factored in, the difference is significantly offset in the overall cost analysis.

In this understanding, regionalization aims at a targeted supplementation of the global supplier portfolio. At least one viable and readily available alternative should be available. More distant suppliers remain part of the portfolio, provided their cost advantages are proportionate to their risk profile.

What this means for daily work

To leverage existing cost advantages, more distant suppliers remain part of the portfolio where their risk profile is proportionate to these advantages. Near-scoring supports this assessment and thus changes how supplier decisions are made on a daily basis. New suppliers are no longer evaluated solely on price and quality, but also on how well they integrate into the existing network and whether they actually cover independent risks.

Strategic buyers and category managers regularly review existing supplier portfolios for common dependencies, such as shared transport routes, critical infrastructure, or regulatory requirements. They work closely with logistics, supply chain management, risk management, and compliance to identify both operational and structural risks across the entire network. Simultaneously, they assess how quickly alternative suppliers can provide additional quantities in the event of disruptions.

This review process is not only conducted during the initial supplier selection but is also integrated into existing supplier and commodity group reviews. Because geopolitical, regulatory, and logistical conditions are constantly changing, the evaluation of the supplier portfolio must also be updated regularly.

Why regionalization is a portfolio decision

Beyond individual supplier selection, near-scoring also impacts the long-term design of the entire portfolio. Regionalization unfolds its value primarily as a permanent design principle for the entire supplier portfolio and less as a one-off reaction to a single disruption.

This leads to the crucial question: Does it have enough independent options to mitigate a disruption in a region and at the same time be able to react within an acceptable timeframe?

This analysis complements the idea described in the third part of this series—namely, integrating resilience into the procurement structure from the outset—by adding a spatial and logistical dimension. Global supply networks are not fundamentally questioned. Rather, the crucial point is to make their dependencies visible and to strategically supplement them with regional alternatives.

How proximity manifests itself as a resilience factor

• Near-scoring expands supplier evaluation beyond a simple comparison of unit costs.

• True diversification does not arise solely from different locations.

• It is crucial that suppliers have risk profiles that are as independent as possible and do not fail simultaneously due to the same disruption.

How resilient is your supplier portfolio?

If you would like to better understand how resilient your supplier portfolio actually is, we can help you to make structural dependencies visible and to derive targeted measures for a more resilient procurement structure.