7 Ways to "Trump" Competition Using Agile Supply Chain

In this article, we will discuss the impact of Trump's policies toward supply chain management and why agile supply chain should be your new best friend.



Background
Let's take a look at stated trade policies according to president Donald Trump as below,

- Withdraw from the Trans-Pacific Partnership (TPP)
- Renegotiate The North American Free Trade Agreement (NAFTA)
- Impose tariff barriers for products from China
- Bring Iphone and Ford back home

Political changes are inevitable because people's attitude changes over time. 

Change can be a good thing but people will always resist to change no matter what change will bring. Peter Drucker, who was one of the greatest management philosopher of our time, once said that,

“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic”

Because change also brings uncertainties, what we need to do is to look on the bright side, embrace change and try to adapt.

Editor's note: this article was written in 2011 but we update this article to reflect current situation.

Agile Supply Chain
Agile Supply Chain is based on the concept of "Agility" which was developed at Lehigh University. The primary focus was to make a manufacturing system became more flexible and could adapt to change. The common definition of agile supply chain is,

"Ability of the supply chain to anticipate and adapt to the changing business situations quickly through product, process and people"

Agile supply chain concept is so popular in Europe but people in the United States don't really care about it very much.

There are many different versions of agile supply chain concept. Anyway, this article adapts “The Triple-A Supply Chain Framework” by Professor Hau Lee of Stanford University based on the article published on Harvard Business Review. The essence of this framework is presented in the infographic below,



1. Evaluate Needs of Final Customers
Can Apple bring the manufacturing of iphone back home? We believe they can. Since they have 2 assembling plants in China, we believe they may use one plant for overseas customers and bring one plant back home to serve home market. But, what are they going to do with the rising costs?

To sell product at higher price, you need to create more value. But what kind of value they should bring to its customers in the United States?

Apple is not a big fan of market research because Steve Jobs believed customers didn't know what they wanted until they saw something really cool. We believe this might change. You need to understand the preferences of final customers so you can determine how to improve.

2. Use Flexible Product Design
Product designers should know the market of raw materials, product commonality and product standardization. Choosing the right components can help company to respond to engineering changes more quickly.

Should Apple use more standardized parts to lower costs?

3. Adopt Postponement Strategy
Postponement concept can be a bit confusing but the simplest explanation is to produce or keep stock of semi-products and assemble them into final products quickly when demand is known. It's also the way to do mass customization (and sell products more expensive).

Should Apple allow people to customize iphone more than in the past?

4. Monitor World Economy
The change in supply market can have the influence on customer's preference. Monitoring world economy and try to identify new supply bases and market will ensure that company is one step ahead of its competition.

Trade war with China, no problem, just switch to its neighboring countries like Taiwan or even South East Asia.

5. Develop Collaborative Relationship
Company that provides suppliers and customers with proprietary tools and market information will cope with changes more quickly and accurately.

Apple is known to be the information hoarder. Should they change this practice? We are not quite sure how they can continue to create “excitement” by keeping everything so secret.

6. Specify Roles And Responsibilities
Companies that implement lean manufacturing concept are familiar with this principle very well. Because roles and responsibilities are clearly defined at staff level up to company level so people know how and with whom to communicate a particular issue. This helps cutting down on a delay in response, especially during supply chain disruptions.

7. Develop Contingency Plan
A classic case study of a contingency plan is a case of fire of Philips facility in New Mexico in March 2000. Nokia who had a contingency plan managed to locate 2 new suppliers and the new lead-time was only 5 days. Meanwhile, Ericsson who didn't have a contingency plan suffered from months of raw material shortage.

Embrace agile supply chain now or “You're fired!”.