Shocks To The Supply Chain

Chief Executive: “Last summer, when The Boeing Co. announced it would delay the introduction of its 787 Dreamliner, CEO Jim McNerney blamed the problem on the company’s supply chain. A large product like an airplane uses thousands of individual parts, but Boeing attempted to mitigate the smaller, individual supply chain quandary by using major suppliers to construct large pieces of the plane. Parts of the wings, for example, are being assembled as far away as Japan. McNerney reported to the press that the delays were attributed to a “slowing up in the supply chain rather than a fatal flaw in the supply chain.”

Boeing’s problem with its supply chain is emblematic of a challenge all U.S. companies now face: managing supply chains that are longer and more convoluted than ever before. For any given product, raw materials can be sourced in Africa, refined in India, produced in China, assembled in Mexico and finally distributed in the U.S. Today, however, the biggest problem—faced not only by manufacturers but also by service companies like restaurants—is the rising cost of the supply chain. This is not necessarily because of the manufacturing piece of the chain, which can be performed in low-wage countries such as China, but because of the rapid rise in transport costs.” Shocks To The Supply Chain

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