Planning for Supply Chain Uncertainty: A Framework to Guide Strategic Action

In recent years, international supply chains have been tested by a series of disruptive events: a global pandemic, port shutdowns, geopolitical conflicts, extreme weather, and rapid shifts in trade policy. As these shocks rippled through global markets, they exposed weaknesses in many manufacturing operations. While companies might withstand a single disruption by absorbing delays or accepting lower profit margins, the compounding and persistent nature of these events has caused significant uncertainty in supply chains.

According to Gallagher’s 2025 Business Owners Survey, 93% of business owners are worried about the impact of supply chain disruptions in the next 12 months, and 73% have already contended with such disruptions in the past two years. In light of these conditions, manufacturers must move beyond reactive adjustments to develop a deeper, structural understanding of supply chain exposure.

This article introduces our Supply Chain Assessment and Lever Evaluation (SCALE) framework—a practical, two-phase approach for identifying structural supply chain vulnerabilities and evaluating targeted mitigation strategies.

The Supply Chain Assessment and Lever Evaluation (SCALE) Framework

The SCALE framework enables manufacturers to proactively assess their exposure to future supply chain disruptions, rather than respond after the fact. It can also reveal supply chain-related opportunities. Because mitigation costs often cut across teams and functions, understanding how risk flows through the business is essential.

Importantly, leaders don’t need exhaustive data or complex modeling capabilities to get started optimizing their supply chain. The high-level perspective offered by this assessment can provide the directional clarity needed to focus resources and avoid costly overreaction in the face of supply chain uncertainty.

Phase 1: Diagnosing Structural Risk in Manufacturing

The first part of the SCALE framework involves evaluating four structural factors—vertical integration, product complexity, supplier footprint, and customer base—and using a simple matrix to measure the risks they carry. This initial analysis helps leadership teams prioritize high-impact interventions instead of resorting to blanket fixes, which may be costly and ineffective.

Vertical Integration

Companies that manage multiple stages of production, from raw material sourcing to final assembly, are more exposed to risk across their entire supply chain. With each step potentially involving different international partners, the opportunities for disruption multiply.

Product Complexity

A company’s bill of materials (BOM)—the comprehensive list of raw materials, components, and subassemblies required to manufacture each product (e.g., chemicals or semiconductors)—directly influences how difficult it is to assess and respond to disruption. Highly engineered products with many interdependent components are particularly vulnerable.

Supplier Footprint

Diversifying suppliers is a common and often effective risk management strategy. However, when those suppliers are spread across multiple countries, they can introduce new vulnerabilities. US automakers, for instance, frequently source components from suppliers across North America, Europe, and Asia, potentially multiplying their exposure to shifting import duties and supply chain bottlenecks. Managing a geographically distributed network also adds contractual complexity, especially when adjustments must be made quickly.

Customer Base

Selling to a few enterprise buyers in a single country is significantly less complicated than serving a diverse customer base that spans sectors and geographies. Companies with a broad customer base cannot apply a one-size-fits-all approach when managing prices, compliance, and logistics in response to disruptions, making it harder to maintain profit margins and customer satisfaction.

Assessing Structural Risk With the SCALE Matrix

To evaluate vulnerability more systematically, companies can use a qualitative SCALE matrix to map the four key structural factors along a spectrum of supply chain risk.

This visualization helps reveal why some companies are better equipped to absorb shocks from new tariffs or other disruptions than their industry peers, and it can inform a targeted response to supply chain risk. By surfacing structural vulnerabilities early, the framework helps leadership teams align mitigation strategies with their specific operational profile.

Phase 2: Identifying the Strategic Levers That Apply to Your Business

The second component in addressing supply chain uncertainty with the SCALE framework involves identifying strategic levers that translate diagnostic insight into practical, prioritized action. These levers reflect the specific opportunities each company has to mitigate risk, strengthen adaptability, or unlock growth based on its unique structure, capabilities, and market positioning.

The goal is to determine where the business has control, influence, or choice, even in the face of external disturbances. Strategic levers can be derived through a structured “outside-in” review of the company’s operating model and market exposure. This process involves three key steps, each described below.

Link Structural Risk to Business Impacts

Each risk factor, as determined in Phase 1 of the SCALE framework, affects real outcomes, such as cost volatility, operational delays, pricing pressure, compliance burden, or lost market share. Categorize these into a small set of impact areas shared across most manufacturers: cost, risk resilience, flexibility, value, compliance, and strategic positioning.

Determine What Can Be Adjusted

For each impact area, leaders can ask: What can we reasonably do (within our structure) to change the outcome? This may reveal levers such as changing sourcing strategy, redesigning products, repositioning with customers, or building new partnerships. Not every company has the same levers. Some levers are accessible immediately, while others require structural transformation.

Test for Feasibility and Time Horizon

Finally, leaders should assess how soon they could pull each lever, and what kind of payoff they might expect. This helps distinguish between short-term fixes, medium-term upgrades, and long-term strategic bets.

Key Strategic Levers for Supply Chain Resiliency

Because supply chain risks differ for each company, the levers that offer the greatest value will also vary. The SCALE framework organizes actionable responses into six types of strategic levers. Each represents a set of targeted interventions that can reduce structural vulnerabilities or unlock strategic opportunities.

• Cost Levers: These levers help companies reduce margin erosion and improve price competitiveness. Tactics might include analyzing landed cost exposure across the BOM or renegotiating supplier contracts to improve terms.
• Risk Levers: These focus on decreasing fragility and strengthening resilience to disruption. Companies, for instance, might conduct deep-tier supply chain mapping to uncover geographic or logistical concentrations, and then act to diversify or redesign their sourcing network.
• Flexibility Levers: Companies may pull these levers to enable adaptability and reduce dependency on any single supplier. Common strategies include developing multisourcing options for critical materials or modularizing components to simplify substitutions.
• Value Levers: These levers protect or expand top-line revenue by strengthening customer relationships and enhancing perceived value. Companies may reposition their value proposition to emphasize differentiation or tailor messaging to highlight unique benefits and build loyalty.
• Compliance Levers: These help manufacturers navigate external constraints while minimizing regulatory delays or costs. Efforts might involve monitoring emerging trade risks, adjusting sourcing in anticipation of policy shifts, or securing certifications to maintain market access.
• Structural Levers: Manufacturers use these levers to realign operations, distribution, or service delivery for long-term competitive advantage. Actions may include establishing new partnerships or redesigning operating models to support future agility.

Case Study: Applying the SCALE Framework

To illustrate how the SCALE framework can help companies assess supply chain risk and identify viable mitigation strategies, let’s consider two US-based manufacturers operating in the same vertical—industrial machinery and equipment—but with very different operating models. The examples are composites that reflect real-world differences in supply chain structures we’ve encountered in our consulting work. We’ll use tariffs to illustrate an external cost pressure, but the implications apply more broadly to other disruptions, including shipping volatility and raw material shortages.

“Globeco”: An International Equipment Integrator

Globeco manufactures industrial machinery used in sectors such as agriculture, logistics, and food processing. It exemplifies a globally distributed, cost-optimized model, emphasizing scale and modularity while relying heavily on outsourced production and a broad supplier and customer footprint. Here are its defining characteristics:

• Low Vertical Integration: Globeco designs and engineers complex industrial machines but outsources the manufacturing of almost all components and subassemblies to a vast global network of specialized suppliers. It is primarily an integrator and assembler.
• High Product Complexity: The company’s machines are very complex, with thousands of parts in the BOM. However, Globeco strives for modular design, meaning many subassemblies or components are standardized and can be sourced from multiple external suppliers.
• Global Supplier Footprint: Globeco meticulously optimizes its supply chain for cost efficiency, sourcing components from the lowest-cost global providers. It relies heavily on suppliers in emerging markets (e.g., China, Southeast Asia) for high-volume, lower-value components and specialized European or US suppliers for high-precision, critical parts. It usually has multiple qualified suppliers for many components.
• Global Customer Base: The company sells its finished machinery to diverse industrial clients across many countries and continents. It serves large enterprises, medium-sized businesses, and even some government contracts.

“Fabco”: A Regional Specialty Fabricator

Fabco also produces machinery for the agriculture, logistics, and food processing sectors, although its product lines do not directly compete with Globeco. Its manufacturing model also differs significantly. It relies on a vertically integrated, regionally anchored model, focusing on control, customization, and deep relationships with both suppliers and customers in its domestic market. Here are its defining characteristics:

• High Vertical Integration: This company performs significant in-house fabrication, machining, and assembly of core components and subassemblies. It even processes some raw materials (e.g., specialized metals) internally. It outsources standard components (e.g., fasteners, off-the-shelf electronics) but keeps critical, specialized manufacturing processes internal.
• Moderate Product Complexity: Fabco’s machines are often custom-engineered or highly specialized for specific applications (e.g., specialized welding equipment, unique pressing machines). The BOM for custom parts is complex but often produced internally, while standard parts are simpler.
• Regional Supplier Footprint: The company prioritizes local or regional suppliers in North America for raw materials and standard components to ensure quality, guarantee fast delivery, and build strong relationships. Reliance on distant, low-cost countries is minimal and is usually restricted to sourcing for unique items not available domestically.
• Regional Customer Base: Fabco’s customer base comprises a smaller number of highly specialized industrial firms within its domestic market and closely integrated trade bloc. Its relationships are often long-term and built on trust and customized solutions.

Phase 1: Diagnosing Structural Risk for Two Different Firms

To better understand each company’s supply chain risk, we can use the structural assessment component of the SCALE framework to map the key characteristics in the matrix below. This approach helps leaders evaluate relative vulnerabilities at a glance and pinpoint areas of strength or overexposure.

As the matrix reveals, Globeco faces broad-based but diffuse risk exposure.

• With thousands of parts sourced globally, duty taxes will likely touch many items in the BOM, creating pervasive cost pressure.
• Its large and diverse supplier base offers flexibility to shift orders, but onboarding new vendors—especially for complex subassemblies—can be costly and time-consuming.
• Because the company operates in a competitive, price-sensitive market, its ability to pass costs through is limited, threatening profit margins and market share if competitors are less impacted.
• The administrative burden of tracking and reacting to tariff changes across dozens of supplier relationships further complicates its position.

Fabco, on the other hand, benefits from a more insulated supply chain.

• Its reliance on regional suppliers and in-house fabrications means it may avoid direct exposure to tariffs placed on distant low-cost manufacturing hubs. In some scenarios, this positioning could even create competitive advantages if import-heavy rivals see cost spikes.
• However, Fabco’s concentrated sourcing strategy carries its own risks. If tariffs or trade frictions affect suppliers of key materials (e.g., specialized steel or high-grade aluminum), the company has limited short-term flexibility to shift sourcing or reconfigure its manufacturing processes. Its strengths in integration and specialization also limit agility when disruptions hit upstream.

While both companies operate in the same industrial sector, their structural choices have created very different risk profiles. Globeco faces widespread exposure from its globally distributed, highly outsourced model, whereas Fabco exhibits concentrated risk due to deep vertical integration and regional dependence. This contrast highlights a key point: vulnerability is not only a function of industry but also of supply chain structure.

Phase 2: Identifying Strategic Levers for Two Different Businesses

Now that we’ve diagnosed the structural risks facing Globeco and Fabco, the next step in the SCALE framework is to identify which strategic levers each company can activate. The analysis below illustrates how these levers vary based on a company’s operational structure, and how feasibility and impact should guide prioritization across short-, medium-, and long-term horizons. In some cases, particular levers have limited actionability, regardless of the timeline.

Globeco has the most to gain in the short term from activating both its cost and flexibility levers.

• With a complex, globally sourced BOM and relatively low vertical integration, immediate margin pressure can be addressed by modeling landed cost exposure and renegotiating contracts where supplier redundancy exists.
• Similarly, multisourcing and modularization—already partially in place—can be accelerated to manage disruption without needing wholesale structural change.

These two levers are actionable within six to 12 months and provide measurable benefits under continued tariff or logistics volatility.

However, Globeco will find risk and compliance levers harder to activate quickly. Its supply base is globally distributed and opaque beyond its direct suppliers, rendering supplier risk mapping and regulatory responsiveness longer-term projects (at least 12 to 24 months). Likewise, its structural levers, such as regionalized production or alliances, require significant investment, cultural change, and coordination—feasible, but likely on a multiyear timeline unless already underway. The same holds true for its value levers, given its large and diverse customer base.

Fabco operates a concentrated, vertically integrated model. It has limited upside from cost levers, since much of its cost structure is internalized. However, it is well-positioned to benefit from value, risk, and structural levers.

• Its close customer relationships and specialization create room to refine messaging, justify premiums, and bundle services—all near-term levers to defend or expand margins (actionable within three to nine months).
• Likewise, its concentrated supplier base makes it easier to map relationships and assure stability.
• As for structural levers, Fabco’s embedded regional relationships enable it to strengthen or form new service alliances or tech partnerships without major realignment, offering medium-term strategic gains with comparatively lower risk.

That said, Fabco may find other levers, including its flexibility levers, more difficult to pursue. Its bespoke fabrication processes and regional sourcing reduce the feasibility of rapid multisourcing or standardized modularization. These actions, if pursued, would likely require product redesign and significant change to its operating model, making them long-term or even nonviable levers without broader transformation.

In summary, the SCALE framework suggests that:

• Globeco should prioritize cost and flexibility levers now, while planning for strategic and compliance levers in the long term.
• Fabco should focus on value and risk levers now, while acknowledging the limitations of its cost and flexibility levers in the current structure.

While both companies operate in the same sector, the structural characteristics of their supply chain dictate divergent actions to address the same supply chain disruptions.

How to Develop Supply Chain Resiliency

Supply chain disruptions are no longer rare events. They’ve become a recurring reality of doing business in today’s global manufacturing ecosystem. Whether triggered by trade policy, regulatory changes, geopolitical tensions, material shortages, or freight volatility, external shocks challenge manufacturers’ resilience in increasingly unpredictable ways.

The SCALE framework we’ve developed offers a structured pathway to action. Rather than waiting for external uncertainties to subside (as there will always be new causes of concern), leaders can use this high-level approach to guide strategic decision-making as conditions evolve. It does not require perfect foresight or extensive in-house resources to take meaningful action. Working with a strategic operations consulting partner like Toptal can augment internal capabilities and help embed resiliency planning into long-term strategy.

Ultimately, the companies best positioned to weather supply chain uncertainty will be the ones that treat resiliency as a core capability, investing in supply chain agility now, before the next disruption hits.

Have a question for Michael or his operations consulting team? Get in touch.