Flexible Supply Chain More Important Than Product Design
According to the Stanford Global Supply Chain Management ForumAn increasingly global business climate means that more and more companies face potentially devastating disruptions to their operations as a result of natural disasters or local health epidemics like SARS. Manmade events like terrorist attacks, strikes, and bankruptcies also have the power to halt production and shipments. A fire at a manufacturing plant somewhere in Southeast Asia can halt laptop deliveries to individuals in Southern California, hurting not only a company’s revenue but the goodwill it has worked to establish with customers.
Over the past 20 years many businesses have adjusted product designs to make them more flexible in responding to disruptions in supply or demand. Computer maker Hewlett-Packard, for example, has gradually shifted from building customized computers for different countries to adopting a common design that minimizes the number of country-specific features, like the power unit, so that there are only a few unique pieces, which can be added in the final manufacturing stage. That way, if the German market experiences a shortage, machines from France can easily be shipped in to fill the gap. This concept of “last-point differentiation” has been one of the keys to computer maker Dell’s success.