Why Companies Are Prioritizing Supply Chain Diversification During NPI

For many companies, the NPI (New Product Introduction) stage has always been about developing and launching something new. But lately, supply chain diversification has come up a lot during NPI.

You would understand that this is the case for brands shipping to the US. But what we have seen is that there are many other companies that ship to Europe, Australia, and other regions that are also looking to diversify their supply chain. Companies have taken this as an opportunity to evaluate new suppliers in new regions to build a stronger supply chain. In other words, they’re killing two birds with one stone: developing a new product while laying the foundation for a more resilient supply chain.

Companies look at the NPI process now as a clean slate. Companies can use their existing supply chain, but why not look at other options for your new product? It’s far easier to set up new partnerships, negotiate better terms, and even shift part of production to other countries. Many are embracing China + 1 strategies, building dual-country supply chains that balance cost, risk, and flexibility from the start.

This shift is turning NPI into a strategic inflection point, not just for product launches, but for long-term supply chain planning.

Reason #1: Diversify the Supply Chain Early

Many companies used to build their supply chain around a single location or supplier, often to simplify operations and control costs. But as the last few years have shown, depending too heavily on one region can expose a business to serious risk that include tariffs and geopolitical tensions to logistics disruptions, and sudden cost increases.

By diversifying their supply chain during the NPI stage, companies can build resilience from day one. Instead of reacting to problems later, they design their supply chain to be flexible from the start. This means spreading risk across multiple regions, avoiding overreliance on a single supplier, and ensuring production can continue even if one location faces challenges.

This proactive approach also makes scaling smoother. When a new product moves from pilot runs to mass production, having more than one sourcing option gives companies better control over capacity, lead times, and costs.

Reason #2: Easier to Build a New Supply Chain with a New Project

During the NPI stage, companies have a unique window of flexibility. They can continue working with their existing suppliers, but they also have the chance to start fresh with a new supply chain while without disrupting anything in production. 

It’s far easier to set up a new supply chain at the beginning of a project before opening tools. Once tools are cut and production is underway, switching suppliers becomes more complicated, expensive, and time-consuming. That’s why many companies use NPI as the moment to explore new partners, qualify alternative suppliers, or shift part of their production to new regions.

For example, a company might keep its existing product line in China but launch its next product in Thailand to diversify risk and build a more flexible foundation. By doing this early, they avoid the pain of relocating production later and gain more control over costs, capacity, and timelines.

In short, NPI gives companies a low-risk, high-leverage moment to build a smarter supply chain.

Reason #3: Take Advantage of New Cost Structures and Negotiations

When companies launch a new product, they have a rare opportunity to reset and negotiate with a new supplier. Instead of being locked into existing pricing, minimum order quantities, or old logistics routes, they can evaluate new regions and suppliers with fresh eyes.

New projects give companies more leverage in negotiating better terms, whether that’s tooling costs, payment terms, lead times, or volume commitments. Suppliers are often more flexible when competing for a new project, and companies can use this moment to compare pricing between multiple regions or partners.

It’s also a good time to rebalance cost structures. For example, many companies are moving part of their production to Thailand or Vietnam to reduce tariff exposure and improve landed costs while keeping component sourcing in China. This kind of hybrid model can offer a meaningful cost advantage from day one.

By approaching sourcing strategically during NPI, companies can build cost competitiveness into the product from the start, rather than trying to fight for savings after the supply chain is already set.

Reason #4: Find a Supplier with Multiple Production Locations

One of the most effective ways to build flexibility into your supply chain is to work with suppliers that have multiple production locations. More companies are prioritizing partners who can offer production in more than one country, for example, manufacturing components in China with final assembly in Thailand for a country of origin outside of China to achieve lower landed costs. 

By selecting these kinds of suppliers during the NPI stage, companies gain the ability to shift or scale production between facilities depending on changing market conditions. If tariffs rise, logistics costs change, or lead times tighten, they can adapt without having to restart the entire sourcing process.

This approach also reduces dependency on a single region, helping brands stay resilient in the face of geopolitical uncertainty, shipping disruptions, or sudden spikes in demand.

Choosing a global contract manufacturer early on gives companies more control and flexibility as their product moves from development to mass production, and avoids the pain of making major supply chain changes later.

Reason #5: Align Supply Chain Strategy with Growth Plans

Every new product isn’t just about the initial launch, it’s about what happens after. As volumes grow and markets expand, companies need a supply chain that can scale with them, not hold them back. That’s why many are using the NPI stage as the moment to build a supply chain that aligns with their long-term growth strategy.

By setting up a diversified supplier base early on, companies create the flexibility to increase capacity, enter new markets, or respond to shifts in demand without major operational disruptions. This approach also allows them to secure favorable pricing, lock in production slots, and establish strong working relationships with suppliers before volumes ramp up.

For example, a brand might launch a product in one region but already have the option to scale production to another facility when demand increases. This level of planning gives companies a clear competitive advantage as they grow.

Conclusion: Supply Chain Diversification During NPI

The NPI stage is no longer just about developing a product, it’s about building the right supply chain behind it. Companies that use this stage to explore new suppliers, new regions, and new cost structures are setting themselves up for long-term success.

Rather than waiting until problems arise, many brands are using NPI to diversify early, giving themselves the flexibility to respond to tariff changes, logistics disruptions, and geopolitical shifts. This is why so many companies are embracing China + 1 strategies, sourcing components from China while shifting final assembly or production to countries like Thailand, Vietnam, or Mexico. It’s a practical way to strengthen resilience without walking away from established supplier relationships.

By diversifying during NPI, companies are building flexibility into their foundation, not scrambling to create it later. This approach reduces risk, improves cost structure, and ensures supply chains can scale with growth. If you are looking to diversify your supply chain then we would love to hear from you. Reach out today.