In this article
For decades the rule of supply chain management was simple: keep costs low and stock lean. A run of shocks, from the pandemic to tariffs and shipping disruptions, has made many businesses reconsider.
Key facts
- 82% of companies in a 2025 McKinsey survey said new tariffs affected their supply chains.
- 39% of affected firms were adopting dual sourcing, and 33% were moving suppliers closer to home.
- 10 to 14 days is the extra shipping time from Asia to Europe when ships avoid the Suez Canal.
- 2026: the near-closure of the Strait of Hormuz has raised energy and freight costs worldwide.
The just-in-time model
Just-in-time production means ordering parts only as they are needed. It frees up cash, saves warehouse space and reduces waste. It was one of the great efficiency gains of the late twentieth century.
Its weakness is that there is little buffer. If one supplier is late, or one shipping route closes, production can stop within days.
What changed
- Tariffs: in 2025 new trade barriers forced many firms to rethink where they buy. In McKinsey’s 2025 supply chain risk survey, 82 percent of respondents said tariffs affected their supply chains.
- Shipping disruption: attacks in the Red Sea pushed many carriers around Africa, adding 10 to 14 days to Asia-Europe voyages. In 2026 the Strait of Hormuz was largely closed, as covered in our guide to shipping chokepoints.
- Higher costs of money: holding stock ties up cash, and that cash costs more when interest rates rise.
The Quiet Importance of the World’s Shipping Chokepoints
Five ways businesses are adapting
| Strategy | What it means | Trade-off |
|---|---|---|
| Dual sourcing | Buying key parts from two or more suppliers | Slightly higher prices, more supplier management |
| Nearshoring | Moving suppliers to nearby countries | Higher unit costs, faster delivery |
| Safety stock | Holding extra stock of critical items | Cash and space tied up |
| Supplier mapping | Knowing your suppliers’ suppliers | Time and effort to gather data |
| Flexible logistics | Pre-agreed alternative routes and carriers | Planning cost, sometimes higher rates |
In McKinsey’s 2025 survey, 39 percent of companies facing tariff impacts said they were pursuing dual sourcing, and 33 percent were developing nearshoring or onshoring plans.
What small businesses can do
Large manufacturers have whole teams for this. Small firms can still take practical steps:
- List your critical items. Which three or four products or parts would stop your business if they ran out?
- Find a backup supplier for each, even if you use it for only a small share of orders.
- Hold a buffer of the items that are hardest to replace, sized to cover a realistic delay.
- Talk to suppliers about where they source from; a local distributor may depend on the same overseas factory as everyone else.
- Build price clauses into contracts that explain how fuel and freight surcharges will be handled.
Local advantage: small firms can often move faster than large ones. A nearby supplier who knows you may deliver in days when global shipping takes weeks.
A balance, not a choice
Few businesses abandon efficiency entirely. The goal is a supply chain cheap enough to compete and sturdy enough to survive the next surprise. Businesses that disclose these risks clearly also tend to earn investors’ trust; our guide to reading an annual report shows where to find them.
A worked example
Imagine a small online shop selling kitchenware, with most products made by one factory in East Asia and shipped by sea to Europe.
- The risk: if shipping takes two weeks longer, as happened when many ships avoided the Red Sea, popular items sell out and customers go elsewhere.
- Step 1: the owner identifies the ten products that make up most of the revenue.
- Step 2: for those ten, a second supplier is found in Turkey, closer to the market, and given a small regular order so the relationship is active.
- Step 3: stock of the top sellers is raised from four weeks of sales to eight, while slower items stay lean.
- The result: slightly higher costs on some items, but far less chance of empty shelves during the next disruption.
Frequently asked questions
Is nearshoring always more expensive?
Unit prices are often higher, but shorter shipping times, lower freight costs, fewer delays and less stock tied up in transit can offset part of the difference.
How much safety stock should a small business hold?
There is no single answer. A common approach is to cover a realistic worst-case delay for your most important items, for example two to four extra weeks of sales, and review it regularly.
What is supply chain mapping?
It means listing not just your direct suppliers but also where they get their materials and parts. It reveals hidden risks, such as several suppliers depending on the same factory or port.
