Recent tariff increases on over $200B of goods imported from China have been described as “catastrophic” by US companies with a significant Chinese supplier base. With so much trade uncertainty lingering, companies are taking actions now to mitigate the effect on their supply chains. Many are now forced to question how product is coming into the U.S. and forming new sourcing strategies: moving manufacturing to another low-cost country, stockpiling inventory, or "re-shoring" manufacturing to the U.S. are some examples.
Whatever your strategy may be, knowing where to locate and how to leverage your assets across the supply chain network are major decisions that depend on many variables.
Over time, incremental and ad-hoc “quick fixes” can create a sub-optimized supply chain network lacking the right inventory, in the right distribution points, moved with the right transportation modes. Periodically re-designing your network can mitigate complexity and ensure you're continually providing the highest customer service at the lowest possible total cost.
When designing - or re-designing - your network, your team (or third party provider) should use a comprehensive set of tools that can effectively assess warehouse and inventory footprint, shipment consolidation, mode shifts, route planning, total cost models, and other factors. Starting with a detailed gap analysis from current to future state, total logistics cost summary, and implementation road map will enable an efficient and thorough implementation.
While the network design includes a transportation "plan" with defined inputs, supply chain professionals know that external factors such as seasonality can interfere with the daily execution of this plan. As a third party logistics provider (3PL), our TMS tools allow for real-time supply chain feedback to drive dynamic network design on a daily basis. This visibility keeps the network agile, efficient, and continuously improved to meet service and cost targets. Re-designing the network's static plan on a regular cadence - such as quarterly - completes a proactive strategy.
Regardless of your position in the trade war, we all face changes in customer expectations, industry evolution, and future uncertainties that require a responsive and dynamic network.