Podcast: How agile supply chain design helps manufacturers navigate global disruptions
Key takeaways
- Diversifying supply sources boosts resilience amid trade disruptions and geopolitical uncertainty.
- Strong supplier development relies on fundamentals like shared metrics and early warning signals.
- Scenario planning prepares companies to react faster and smarter to unexpected policy shifts.
- Collaboration, not cost-cutting, leads to sustainable supplier relationships and innovation.
Darrell Edwards is a University of Tennessee System supply chain professor and a former chief supply chain officer and chief operating officer at La-Z-Boy Incorporated. With more than 30 years of global operations and supply chain experience, Darrell has consistently driven impactful results in the consumer products sector. Ji Li is a supply chain advisor for J&J Investment and Consulting and a former supply chain director for Boeing. Drawing on more than 20 years of experience in the aerospace, medical, and technology sectors, Ji leads transformative supply chain strategies that fuel profitable growth, even amid global challenges. Darrell and Ji recently spoke with Laura Putre, senior editor of IndustryWeek, about how businesses can navigate supply chain challenges amid shifting policies from Washington.
Below is an edited excerpt from the podcast:
IW: Let's start with you, Ji. We're seeing manufacturing companies pivoting around their supply chains to deal with uncertainty. Have you seen any good practices, as well as maybe some misguided approaches?
JL: Yeah. Laura, what I've seen, I would say in the last few years—particularly from large companies—is that they've been working on diversification. I think Gartner had a survey, and it’s an interesting point. What they found was that those big companies stated 50% of them had executed the so-called China Plus One strategy by 2022, and then 80% of them had executed the China Plus One strategy by 2024.
So what this tells you is that companies have been working on diversification for quite some time, and certainly, those who chose to do that earlier are in a much better position today with all the trade war and uncertainties.
However, the smaller and medium-sized companies, I think due to various reasons, haven’t quite gotten there yet. So they’ve been struggling more. They’ve reacted in a very tactical way—building up inventory, holding shipments, or finding some kind of interim mitigation method.
So I would say the good practice I’m seeing is really about diversification.
IW: Darrell, do you have anything to add to that? What are you seeing as far as good practices?
DE: You know, I think you did a really nice job summarizing what I’ve seen as well. I tend to think in terms of multiples—multiple geographies, multiple suppliers. I think we learned a lot through COVID. That was kind of the beginning of really framing or redesigning our global supply network from a manufacturing perspective.
We saw a lot of companies looking at redesigning—moving certain supply bases from one geography to multiple geographies, making sure they were not single-sourced in certain commodities or inputs, and ensuring they were at least dual-sourced, sometimes triple-sourced. So diversification, as Ji said, is really a good strategy.
I also see some companies looking at strategic inventory reserves for key commodities to minimize disruption. On more standard commodities, those are typically multi-sourced and approached more from a cost perspective than a strategic one.
Additionally, after COVID—and I continue to see this—companies are increasing their visibility through technology. It seems that the companies with the best information and greater visibility are able to make quicker, more intelligent decisions.
So, you know, it’s a mix of all that. There’s not a one-size-fits-all—it depends on the sector, area, geography, and company size, as you said. But some blend of those things helps companies mitigate risks when it comes to disruption.
IW: What fundamentals of supplier development have become even more critical now?
DE: Yeah, you know, from my view, supplier development done well is—at least in my experience—about 70% fundamentals. Your success comes from executing those fundamentals really well. Maybe 20–30% is about doing something new or whatever is currently in vogue.
But basic fundamental supplier development is still very critical. From the initial stages—boots on the ground—to developing supplier scorecards that are meaningful, making sure your supplier has shared metrics with you so you both understand expectations and execute against them at a high level.
We also tend to do some 360° surveys—looking within the four walls of your business to see what you're doing well and where you're vulnerable. Then have your suppliers and customers do the same. I think it’s healthy for suppliers to go backward in their supply and conduct similar surveys to identify their own vulnerabilities. That way, you can get ahead of potential issues.
So again, the fundamentals and foundational elements of supplier development still work really well. And I’ll probably mention visibility more than once—being able to develop early warning signals in your metrics so you can spot issues before they become critical. Those very fundamental tenets still hold up.
IW: Ji, did you want to add anything to that about the fundamentals? And maybe you could talk a bit—since I know you wrote about this in your IndustryWeek article—about pressure testing and best practices around that?
JL: Yeah, the first thing in terms of supplier development—I view it as basically a collaborative approach between the two parties to create something that doesn’t exist today or create something better.
So I don’t view supplier development as just performance improvement. The fundamental thing that doesn’t change is that it should be a collaborative approach that benefits both sides.
I always think about this like a negotiation. My approach is to try to create a bigger pie for both parties, and then we can talk about how to divide it equitably. What I’m seeing a lot these days, though, is the opposite—people trying to take a bigger slice of an existing, maybe even shrinking, pie. I think that’s the worst form of supplier development.