No doubt you’re aware of the urgent push by global manufacturers to diversify their supplier base. Now comes the opposite problem: “supplier sprawl.”

A combination of factors, including rising wages in China, high tariffs, geopolitical strife, the need to make product closer to western markets, and a general desire to mitigate the risk of sole sourcing, has prompted manufacturers and brands in recent years to widen their supplier options, both in terms of the number of vendors and where they’re based.

There’s solid evidence that such a move makes sense in these volatile times. But at least one manufacturing executive believes supplier fragmentation is becoming a competitive disadvantage for many supply chains.

Dave Evans, president and CEO of factory automation components maker Misumi Americas, argues that the resulting “supplier sprawl” carries hidden costs, to the point where leading manufacturers are now moving to consolidate suppliers to reduce complexity and shorten time to market.

What’s happening, Evans says, is that high-tech products are becoming so intricate and multi-faceted in content that manufacturers are “really pushing the boundaries” of where they source parts, components and assemblies. Satellites, humanoid robots and nuclear equipment are just a few of the sophisticated systems that require tapping suppliers in multiple geographies and areas of expertise.

Supplier diversification is “good up to a point,” Evans acknowledges, in that it reduces the risk of sole dependence on China and a handful of other low-cost countries for critical items.

At the same time, as products become more complex, manufacturers find themselves “building things at a rate that’s really hard for people to understand,” Evans says. “The technology gets better exponentially, not linearly,” and producers end up “just grabbing wherever [they] can to make these products.”

He cites the case of a maker of vehicles for last-mile mobility — electrical two-, three- and four-wheelers — that one might assume would draw on established supply chains for production of high-end bicycles. Turns out, though, that the products cross into the hybrid automotive world, and the parts to build them are coming from suppliers in aerospace, robotics and industrial automation as well. The need for mass customization forces original equipment manufacturers to “find components where they exist.”

In the end, therefore, it’s specification, not diversification, that’s to blame for supplier sprawl, Evans says.

And those extra “hidden” costs that are hitting producers’ balance sheets? Notwithstanding recent advances in automation, Evans notes, 70% of manufacturing cost structures is still people. “The job of supply chain professionals has never been more complex,” he says, “and they’re being asked to do more things today.”

The result is burnout among global supply chain managers, who are scrambling to enforce supplier conformance to strict quality criteria, while ensuring on-time delivery from multiple geographies. “That doesn’t show up as hard cost,” Evans says. Instead, it manifests in the form of delayed time to revenue.

It's not all bad news. The 2026 State of Manufacturing & Supply Chain Report from Fictiv, maker of a platform for managing custom mechanical parts, notes recent advances in artificial intelligence that Evans says can help manufacturers improve the clarity and accessibility of relevant data in a complex supply chain. (He is a co-founder of Fictiv, which was acquired by Misumi in 2025 and is now a product line under the Misumi Americas brand.) Fully 98% of the 300-plus manufacturers and supply chain leaders surveyed in the report are actively driving AI adoption. The technology “is going to help counteract the complexity that engineering is bringing, to allow supply chains to run smoothly,” Evans says, adding that those failing to embrace AI are in danger of coming to a ”standstill.”

“This shift reflects a broader consensus that AI is now a required capability for maintaining competitiveness and operational reliability,” said Ryusei Ono, representative director and president of Misumi Group Inc., in a note accompanying the report.

Sounds good on paper, but manufacturers’ actual rate of AI adoption leaves much to be desired. Evans says organizations “are still trying to figure out how to utilize the technology.” Most are treating implementation as they would any large software application, instead of understanding the need for “a completely different workflow” that comes with agentic AI.

Even with the help of AI, manufacturers and brands must find ways to strike a delicate balance between supplier diversification and sprawl. Evans cites a Fortune 50 maker of medical devices that listed 12,000 SKUs for casters across its product portfolio. “Do you really need that type of diversification?” he asks. “The simple answer is no. That’s ‘sprawling’ in the true sense of the word.”

By their nature, new-product introductions entail a certain amount of initial supplier sprawl, Evans. But procurement organizations should nevertheless be on the lookout for any opportunities to harmonize and consolidate across departments and bills of materials. “A large industrial catalog should be able to have one source,” he says.

Next: Welcome to “the supplier squeeze.”