Past The Tipping Point: Record Oil Prices Require New Supply Chain Strategies To Enable Future High Performance

Strategies such as just-in-time lean manufacturing and even low-cost country sourcing must be re-valuated in light of fuel prices. In every respect, author has entered a new era where different supply chain strategies are needed to engender high performance. Most supply chains were designed in an era of significantly lower fuel prices. Global sourcing and manufacturing decisions traded off longer transport distances for cheaper labor. Inventories were kept low, with materials shipped in smaller batches via faster but more fossilfuel-intensive modes. Distribution models emphasized consolidation, with fewer facilities and longer transport distances. Each of these supply chain strategies depended on (and assumed) reasonably priced transportation.