the migratory supply chain

A new term has begun to creep into the lexicon: the migratory supply chain. But despite the similarity in their names, these supply chains have little in common with whooping cranes or monarch butterflies.

What is a migratory supply chain? 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.

As complex as that may sound, we suspect that Sun's supply chain execution sometimes becomes even more convoluted. A shift in sourcing strategy, for example, could introduce additional layers of complexity. The sourcing location for a given component might change, as might the location of an available component if inventories exist. So, the dance of the migratory supply chain can go on, with a surprising number of variations.

But wait, there's more
That's just one example, however. Continuing shifts away from purely domestic manufacture create another kind of migratory supply chain.

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.

What's particularly notable about today's migratory supply chain is the speed with which all this migration must take place. The smallest change ripples quickly throughout the chain, demanding quick adjustments. We used to suggest that a distribution network needed reexamination once every five years. Now, it is clear that looking at the overall supply chain structure is a never-ending responsibility.

Ready to react
Globalization has really let the genie out of the bottle, with seemingly infinite possibilities for movement—and migration. Even a global company with relatively stable sources of supply (however far flung); a relatively wellestablished network of retail outlets; and a domestic physical distribution operation that has been honed to world-class status is unlikely to be immune from the need to migrate. It, too, must be ready to make adjustments to its supply chain at a moment's notice.

Forexample, when the top-selling item in the new season's line absolutely, positively has to be in the stores on a certain date, the company must be ready to shift a shipment from the slow boat from China to expedited air. Likewise, it must be prepared, when port congestion ties up operations in California, to begin bringing the goods into the country through Pacific Northwest ports.

In all likelihood, this same company will be poised to restructure—migrate— its supply chain to divert shipments to East Coast ports if necessary. That could mean moving goods through the Panama Canal if it's able to, or coming the other way, through the Suez Canal. By the same token, it must be ready to divert shipments to Charleston or Savannah, if trouble develops at New York/New Jersey. And whatever the decision, it's bound to have repercussions throughout the chain, including the selection of ground transport.

Shippers do all this several times a year, based on dynamic conditions in their supply chain and on local developments with their principal ports of entry. And they've been doing it for some time, since well before the term "migratory supply chain" popped up.

Here to stay
Only time will tell whether the term "migratory supply chain" sticks. But, whatever we call it, the phenomenon of conscious supply chain migration is, we think, here to stay. For a growing number of companies, managing a migratory supply chain has become a way of life.

In fact, it appears we've only begun to scratch the surface of what is possible— actually, probable—in globalized supply chains. The trend is fairly clear—wider ranging, more complex, and faster. Migratory supply chains may be the only way to keep up.

This much we can pretty well guarantee: whoever is standing still will not get the license plate number of the supply chain that runs them down.