The Migratory Supply Chain
November 6, 2006 by Splatty
Filed under Supply Chain Management
I read an article from DC Velocity online about a new supply chain concept (at least the term was new to me) called the “migratory supply chain”.
What is the migratory supply chain concept?
It’s perhaps best explained by way of example. For many, the idea of the migratory supply chain is epitomized by the one operated by Sun Microsystems. Sun specializes in complex, often uniquely configured, systems with many components, individually sourced in different low-cost locales. Any given order, therefore, will have a different supply chain profile from other orders.
That means Sun’s supply chain execution will “migrate” from order to order to order, with different transport components being marshaled in different sets of countries to move all of an order’s components to the point of installation. When the central authority is notified that all components for an order are ready to ship, it notifies the various carriers/modes, in turn, for complete and coordinated order delivery.
The article continues to describe:
Take the case of a company that moves some manufacturing to Mexico. One of its first tasks will be to redesign its supply chain and restructure its distribution network. Raw materials will flow in different directions, with some going to Mexico and some to the mother operation. (Mexico, we should note, is merely an example; we might as well have used China or another low-cost nation. The essential dynamics are the same.)
That’sunlikely to be the end of the story, however. As time passes, a number of things could happen, all of which would require further supply chain migration. For example, the company might shift more work to Mexico. Or it might decide that it can save even more money by shifting some of its production to Asia, and begin producing some components in Viet Nam, while leaving others in Mexico. Or it might decide to source all of its components in Asia. And that’s not all. After a few months of sourcing in Asia, it might decide that the quality really isn’t up to par, and move production back to Mexico, or the United States, or … well, you get the picture.
In looking at these concepts from a transportation perspective, the supply chain components mentioned above can prove to be somewhat difficult for a freight forwarder to coordinate with the multitude of suppliers. In freight forwarding terms, the above scenarios would require a “merge-in-transit” type of cargo move. For instance say you have product available in the United States that needs to move to an end customer in Hong Kong, however another component manufactured in Germany needs to be “married” with the US piece prior to final delivery to the customer. The most logical solution for this shipment would be to ship both products to Hong Kong separately and have the forwarder clear both shipments through customs and then combine them into one shipment at destination for final delivery to the customer.
As supply chains become more intricate and sophisticated, third party logistics companies will need to adapt and remain flexible in order to provide solutions for the ever evolving supply chain needs of global companies.
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