Supply Chain Resilience Beyond the Buzzword
Supply chain resilience has evolved from an emerging concept to a strategic imperative. The COVID-19 pandemic, geopolitical tensions, natural disasters, and technological disruptions have collectively demonstrated the critical importance of supply chains capable of withstanding and recovering from various forms of disruption. For mid-market companies, the challenge is translating awareness of supply chain risk into practical action. What does resilience actually mean in operational terms, and how should resource-constrained organizations prioritize their efforts?
Concentration risk represents the fundamental vulnerability. When too much of a company’s operational stability depends on a single supplier, customer, or geographic region, disruptions affecting that concentrated source can ripple throughout the entire organization. Research published in the Journal of Operations Management during the pandemic demonstrated this clearly: firms with diversified supply bases had meaningful advantages in maintaining operations during disruption because alternative suppliers were available when failures affected portions of their supply base. For firms concentrating sourcing on major suppliers, any disruption affected a large proportion of total supply with no ready alternatives.
The starting point for reducing concentration risk is visibility. Organizations need to understand not just their direct supplier relationships but the dependencies behind those relationships, including fourth-party vendors and geographic concentrations that may not be apparent from procurement data alone. A 2020 incident illustrated this when a major cybersecurity provider experienced an outage that triggered global system crashes. For many mid-market firms, that provider was embedded through managed service providers with no fallback plan. Recovery was slow because too much risk was concentrated in a single vendor that many organizations didn’t even realize they depended upon.
Diversification strategies must balance resilience against efficiency and cost. Supplier diversification, spreading purchases across multiple vendors to reduce dependence on any single source, represents the most direct approach to reducing concentration risk. However, diversification typically increases procurement complexity and may sacrifice volume discounts or relationship advantages with primary suppliers. The key is targeting diversification where it matters most: critical materials, single-source components, and upstream suppliers where disruption would have outsized operational impact.
For mid-market companies, the path to supply chain resilience doesn’t require massive investments in technology or wholesale transformation of procurement practices. It begins with honest assessment of existing concentration risks, identification of the vulnerabilities that would cause greatest operational harm, and targeted actions to reduce exposure in high-risk areas. The companies that navigated pandemic disruptions most successfully were those that had already invested in supplier diversification and documented dependencies. Building that foundation before the next disruption is far more effective than scrambling to respond once supply chains are already failing.