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Don’t begin by picking a replacement country. First identify which components could stop production or disrupt critical services, map where they—and their upstream inputs—actually come from, and then qualify practical alternatives. A second supplier, another production location, targeted inventory and selective domestic capacity can all help; the right mix depends on the component and the time you need to recover.
Why is relying on one country a supply-chain risk?
A product may have several suppliers on paper but still depend on the same country, upstream manufacturer, transport route or production stage. If that shared point is disrupted, nominal supplier diversity may offer little protection. The goal is therefore not simply to count suppliers or move purchases across a border: it is to create credible ways to keep operating or recover when a critical source is unavailable.
The OECD’s 2025 review found that 50% more products were sourced from a limited range of suppliers in the early 2020s than in the late 1990s. That is a global trend, not a measure of any one company’s exposure. The same review’s modelled relocalisation scenarios could reduce global trade by over 18% and global real GDP by more than 5%; resilience did not consistently improve, and GDP volatility rose in more than half of the economies modelled. These are scenario results, not a forecast for an individual business.
What should you map before choosing an alternative?
Build the map around critical components and production stages, not only direct vendor names. OECD guidance emphasizes extensive, timely information because risks can sit deeper in the chain than a purchasing team’s immediate suppliers.
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- Critical inputs and processes: Identify components whose loss could halt production, prevent service delivery or threaten a critical function. Record the manufacturing stage and any specialized process involved.
- Supplier and facility locations: Capture where each supplier makes or processes the item, not just its headquarters or invoicing address.
- Upstream dependencies: Ask suppliers about important subcomponents, materials, manufacturing sites and single-source dependencies. Check whether multiple direct suppliers ultimately rely on the same country or upstream source.
- Movement and buffers: Map warehouses, inventory levels, transport routes and transit time. A second source may not help quickly if it uses the same exposed route or cannot deliver within your recovery window.
- Recovery information: Record how long it would take to restore supply, switch production or qualify another source, and what capacity an alternative could realistically provide.
Use supplier conversations and information sharing to fill gaps, while noting which dependencies are confirmed and which remain unverified. A map that makes uncertainty visible is more useful than one that treats assumptions as facts.
How do you rank exposure and compare options?
Assess each component separately: a common, standardized item may have workable substitutes, while a customized or technology-intensive part may be difficult to replace quickly. Concentration matters, but so do the consequences of a shortage and the time it would take to recover.
Rank #2
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- Business impact: What production, revenue, customer service or critical operation would be affected if supply stopped?
- Concentration: How much depends on a single supplier, country, facility, upstream source or route?
- Recovery time: How long can operations continue, and how long would a disruption or a switch to another source take?
- Substitutability and qualification: Is another product technically acceptable? What testing, certification, regulatory approval or production change is required before it can be used?
- Delivered cost: Compare purchase cost with qualification, transport, inventory and other costs of maintaining the alternative.
- Location conditions: Consider workforce, utilities, infrastructure, transport access and the capacity to produce at the required scale.
- Other exposures: Evaluate regulatory, geopolitical and cyber risks for the supplier and location.
Then compare the mitigation choices against the component’s requirements and the recovery time you need. None is a universal substitute for the others.
| Mitigation | What it can do | Trade-off or limit |
|---|---|---|
| Qualify another supplier | Creates an alternative source without requiring the whole industry to relocate. | Qualification takes time and may add cost; the alternative may share upstream dependencies with the incumbent. |
| Use another production location or near-shore source | May shorten a route or reduce reliance on a single production location. | Proximity alone does not remove shared upstream, infrastructure or geopolitical risks. |
| Hold targeted inventory | Can provide time to manage a disruption or shift to another source. | It incurs carrying costs and cannot replace every specialized input or cover an indefinite interruption. |
| Invest in domestic capacity | Can support selected critical needs where security, lead time or strategic requirements justify it. | Capacity may be costly and slow to establish; domestic production does not automatically eliminate dependencies. |
Choose by component rather than adopting one location policy for the whole business. Standard products with simpler technology may be easier to diversify than highly customized, technology-intensive products that depend on scale economies.
Rank #3
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What can we do to implement it?
- Select critical inputs. Start with components whose loss would halt production or threaten critical services. Rank them by business impact as well as supplier or country concentration.
- Map actual dependencies. Record suppliers, facilities, production stages, upstream inputs, inventory, warehousing and transport. Look for apparently different suppliers that share a country or source.
- Set a recovery priority. For each critical item, document the impact of a stop, the time available before operations are affected, the recovery time and whether a viable alternative exists.
- Qualify alternatives in advance. Assess candidate suppliers and locations for technical fit, regulatory requirements, capacity and delivery time. Complete the necessary testing or approval before a disruption makes a switch urgent.
- Choose a practical mitigation mix. Use additional sources where feasible, targeted inventory where the time buffer justifies its cost, and selective near-shoring or domestic capacity where the component’s needs warrant it.
- Exercise a disruption. Simulate the loss of a supplier, country or transport route. Check whether the alternative can deliver in time, whether inventory is accessible and who is responsible for decisions and communications. Assign corrective actions for gaps the exercise reveals.
- Update the map and assumptions. Revisit dependencies, supplier capacity, trade conditions and alternatives as they change. A source that was viable when qualified may no longer meet current requirements.
Why can’t semiconductor supply chains simply be brought home?
Semiconductors illustrate why geographic diversification can be difficult. Their value chain is distributed across specialized economies, and the OECD’s 2025 analysis says no country currently performs every stage or produces every semiconductor type used by downstream industries. Building capacity requires substantial investment as well as skilled workers, ultraclean water, reliable energy and transport infrastructure.
The concentration is also specific to certain products: the OECD executive summary reports that TSMC in Chinese Taipei produces more than 90% of leading-edge logic chips. That figure concerns leading-edge logic, not all semiconductors. The OECD also compares semiconductors’ 8% share of final demand in ICT and electronics with primary energy’s 2%, using underlying 2018 data; it is an indicator of their importance to that sector, not a current universal share for every industry.
Rank #4
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For semiconductor-dependent businesses, resilience may require mapping the particular chip and production stage, checking where suppliers and upstream inputs are located, and planning for disruption rather than assuming that one country can quickly reproduce the full ecosystem. The UK National Semiconductor Strategy states, “No country will be able to achieve supply chain autonomy.” This is the UK government’s strategic framing, and it reinforces the case for cooperation and contingency planning rather than relying on complete self-sufficiency.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.When does reshoring make sense—and when does it not?
Domestic capacity can be a useful part of a portfolio when a component is strategically important, alternatives are limited, or lead time and security requirements justify the investment. It should be compared with supplier diversification, inventory and other location choices on the same component-level basis.
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Broad relocalisation is not a guaranteed resilience measure. OECD modelling indicates that economy-wide moves to bring production home can carry significant trade and output costs without consistently improving resilience. Those modelled effects do not predict the result of a particular company’s investment, but they are a reason to test whether a proposed move actually creates an independent, usable source rather than merely changing the location of a dependency.
How should disruption planning fit into the sourcing strategy?
A qualified alternate is valuable only if the organization can activate it under pressure. Maintain transparent working relationships with suppliers and customers, clarify who can authorize a switch, and exercise scenarios that test both information flow and operational response. The UK government’s semiconductor strategy includes cross-government and industry crisis and contingency planning, reflecting that resilience involves coordination as well as sourcing decisions.
OECD Secretary-General Mathias Cormann said in the OECD’s 2 June 2025 release: “For trade to continue to provide the foundation of our shared prosperity, and to ensure trade delivers on our citizens expectations, we need to work together to enhance the reliability and resilience of our supply chains,”. For an organization, the practical implication is to maintain cooperation and current dependency information across the suppliers and customers needed to respond to a disruption.
How to diversify a technology supply chain away from a single country
Treat diversification as a component-level recovery plan, not a country-swapping exercise. Map the real dependencies, decide what level of concentration and recovery time the business can tolerate, and qualify alternatives before they are urgently needed. Combine those alternatives with inventory, location choices and capacity investment where each is justified; then test the plan and update it as conditions change.
Quick Recap
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