The supply chain mistake costing businesses billions and what you should do instead

Depending on a single supplier, platform or revenue stream once looked like a strength. In today’s volatile market, that same dependency can leave a supply chain with no way to respond when a key source disappears. Building in redundancy before a crisis forces the issue, and treating backup relationships as essential rather than optional, solves the problem.

On today’s episode of Strategic Edge, Jay Abraham, Founder and CEO of The Abraham Group, challenges a belief many business owners still hold onto. Controlling your entire supply chain, the thinking goes, is the safest strategy. Abraham argues the opposite is now true, and he lays out what business owners should build instead.

The risks of consolidation in today’s supply chain

Depending entirely on one supplier, one platform or one revenue stream once looked like control. Abraham says that assumption no longer holds in a volatile market.

"The key in life, in business, is either you're in control or you're being controlled. It's about as simple as that."

The COVID-19 semiconductor shortage illustrates the stakes. U.S. car dealers who relied on a single chip source lost an estimated $20 billion to $30 billion collectively during the shortage, while Toyota, which sourced chips from multiple suppliers, gained roughly $5 billion over the same period. 

That gap comes down to a simple principle, according to Abraham: a business is either in control of its own fate or controlled by whatever it depends on most.

Abraham extends that logic beyond suppliers. Depending on a single platform, a single salesperson or even one key employee carries the same risk. If that one point of dependency fails, the business faces a threat that can escalate into what Abraham calls ruination.

Building a bench of backup suppliers

Abraham’s fix starts before a crisis hits. Businesses should identify multiple quality sources for every input they depend on, not just a single backup held in reserve.

Maintaining active relationships with secondary suppliers serves two purposes. It gives a business leverage and support if a primary source fails, and it lets that business see how a backup supplier performs under normal conditions, not just when desperation limits its options.

"Start buying from many of them, for two reasons. One, you want them to be supportive if you ever need them, and you hope you don't, they're your hedge. And secondly, you want to see how they perform when it's not desperate."

Waiting until a primary supplier fails to approach a backup puts a business at a disadvantage, since the backup supplier will recognize the desperation and negotiate from a position of strength. Abraham recommends paying secondary suppliers competitively from the start, so they have incentive to prioritize that business when it counts.

Practical ways to find new sources

Finding alternative suppliers takes less effort than most business owners assume, according to Abraham. Non-competing businesses in a similar category, or salespeople who sell adjacent products, often know exactly who else supplies that market. AI search tools can generate a working list of candidate suppliers in minutes.

Another approach involves LinkedIn. Former sales representatives who once worked for a current supplier but have since moved on can point a business toward other competitors in that same space, since they typically know the full landscape of who else sells into it.

Abraham points to a pattern in the auto industry as a real-world example of what happens when businesses skip this step. Used car managers frequently send trade-ins straight to auction instead of calling competing brand dealerships first, even though those dealerships often pay more for the same vehicle. He frames it as a habit built on convenience rather than a lack of available options.

The underlying issue, Abraham says, is rarely that alternatives don’t exist. It’s that finding them requires a deliberate process most businesses never start.

The cost of staying complacent

A comfortable relationship with a current supplier can mask better terms sitting elsewhere. Abraham says businesses that never shop around risk paying more, or accepting worse service, than what’s actually available in the market.

He illustrates the point with a client who specialized in buying rental single-family homes. That client required anyone who wanted to work with him privately to view at least 100 properties before purchasing a first one, specifically to prevent them from settling on the first option they saw out of convenience.

Businesses that build redundancy into their supply chains now, position themselves to withstand disruptions that catch less-prepared competitors off guard. Abraham’s advice: start lining up alternative suppliers today, while a primary relationship is still stable, rather than waiting for a crisis to force the search.