Strategies for supply chain derisking amid global uncertainty

By Ronak Gohel, director analyst, Gartner Supply Chain

New tariff disputes, shifting trade policies, and geopolitical tensions are pressuring supply chain leaders to adapt their network strategies. The stakes are high: nearly two-thirds of supply chain leaders expect geopolitical risks to drive up their total cost to serve in the coming years, according to a Gartner survey.

Many organizations are now shifting from fully embracing globalization to strategic derisking, reconfiguring supply chain networks to balance resilience, cost, and growth. Seventy-seven percent of respondents surveyed by Gartner expect to make network changes to address the impact of new tariffs. But with a range of approaches available, how can chief supply chain officers (CSCOs) select the right strategy for long-term success?

4 approaches fit for long-term strategy

The days of a one-size-fits-all global trade strategy are over. Today’s supply chain leaders must evaluate four distinct approaches to derisking their supply chains, each with its own benefits, trade-offs, and ideal scenarios:

1. Divesting: This approach involves completely ceasing operations in a target market. It’s best suited for situations where regulatory barriers, local competition, or consumer preferences make continued presence untenable. However, divesting can limit future growth if the market is strategically important, and organizations must ensure their remaining network can absorb the additional volume without compromising service or inflating costs.

2. Decoupling: Splits operations, creating a separate ecosystem independent of the target market. This strategy is often driven by the need for regionalization, regulatory requirements, or business continuity. While it can enhance resiliency and reduce exposure to geopolitical shocks, decoupling may increase production costs by sacrificing economies of scale. It’s most effective when regional networks are necessary for compliance or when product characteristics demand local adaptation.

3. Diversifying: Represents adding operations outside the target market while maintaining a presence within it. This approach balances risk and cost efficiency and includes strategies such as nearshoring, low-cost diversification and China +1. It’s particularly valuable in volatile environments, or where skilled labor and robust supply ecosystems exist in multiple regions.

4. Doubling down: Sometimes, the best path is to reinforce existing operations, expanding in the current market to build robustness and efficiency. This is most viable when alternative supply ecosystems are lacking, or when the current network remains the most cost-effective. It’s also appropriate when the risks of change outweigh the potential benefits, or when protecting existing assets is paramount.

Selecting among these approaches requires CSCOs to weigh not just risk, but also long-term strategic objectives such as improving service levels, enhancing flexibility, supporting growth, or advancing sustainability goals.

Barriers to adoption of different approaches

Despite the clear need to derisk, organizations face significant barriers when adopting new supply chain strategies. Financial constraints are often the first hurdle, as shifting or expanding networks requires substantial investment and may be complicated by existing contracts or increased operational costs.

At the same time, the maturity and availability of local suppliers and skilled labor can limit the feasibility of regionalization or diversification, requiring organizations to invest in supplier capabilities and workforce development.

Regulatory uncertainty, driven by policies aimed at protecting domestic industries, shifting trade agreements, and escalating tariffs, adds complexity, making it essential to remain agile and seek local partnerships to minimize risk. Logistical challenges, such as inadequate infrastructure or impact to distribution networks, further complicate network changes.

Finally, talent shortages in new markets can hinder execution, making collaboration with educational institutions and investment in training essential. Ultimately, the ability to realistically assess and address these barriers will determine which derisking strategies are viable for any given organization.

Factors to successful implementation

Implementing an effective derisking strategy requires more than just choosing an approach. It demands alignment with broader business objectives and a nuanced understanding of market dynamics. Four steps to consider:

Step 1: Start with long-term objectives: Derisking decisions should be made in the context of the organization’s growth, service, sustainability, and flexibility goals. For example, nearshoring may improve customer responsiveness, while diversification can support both risk reduction and market expansion.

Step 2: Assess market importance and alternatives: The right approach depends on how critical a target market is and the availability of viable alternatives. Complex supply chains often require a mix of approaches. According to Gartner, 61% of companies executing low-cost diversification also pursue nearshoring.

Step 3: Assess barriers and impact on strategies: Evaluate various impacts on desired strategies, including financial, regulatory and labor. Leaders should evaluate barriers at both the product and geographic level, adapting as conditions evolve.

Step 4: Act decisively: A structured assessment of barriers and feasibility, covering financial, ecosystem, regulatory, logistics, and talent domains, enables organizations to make informed decisions. Even choosing to maintain the status quo (“double down”) should be a deliberate, strategic choice, not a default.

The path to resilient growth

As global uncertainty persists, supply chain leaders face a pivotal challenge: how to adapt their networks for resilience without sacrificing competitiveness or growth. The path forward begins with a clear-eyed assessment of risks, barriers, and strategic priorities—followed by decisive action.

To begin, CSCOs should map current network vulnerabilities, engage cross-functional teams to assess barrier impacts, and pilot derisking strategies in targeted areas. By proactively selecting and implementing the right mix of approaches, organizations can not only weather today’s uncertainty but position themselves for long-term success in a volatile world.

About the author

Ronak Gohel is a director analyst in the Quality, Risk, and Network Design Team of Gartner’s Supply Chain Practice. Ronak advises companies on designing supply chain networks to optimize performance and capacity for total network cost, service, agility and resilience.

SC
MR