A recent article (Traditional Risk Models Don’t Apply During Tariff Uncertainty | IndustryWeek) usefully discussed supply chain strategies for volatile trading environments, but it didn’t address some important considerations. The authors catalog short- and medium-term strategies for supply chain management in this much more volatile trading environment, and some of the factors to consider (e.g., product perishability, demand sensitivity).
Yet most of the medium-term strategies are generally not within the purview of supply chain managers (except dual sourcing), no matter how senior:
- Demand management decisions generally belong to sales (even if they consult manufacturing and supply chain)
- Most process agility (e.g., changing fabrication to switch between materials) belongs to other process owners, and the costs to build such capability will be levied against them, not supply chain
- Similarly, manufacturing flexibility is costly for production to implement, and the factories generally own these decisions (and the CAPEX burden)
- Product design lives with engineering, with manufacturing input (we hope)
This highlights a key challenge: effective management of volatile trade environments is both cross-functional and strategic. The medium-term strategies suggested by the authors require functional leaders to coordinate investment and execution if full value is to be realized; it does little good to diversify purchasing to additional materials (such as different grades of steel) if manufacturing isn’t able to accommodate them. The cross-functional nature of these strategies puts a premium on coherent, disciplined decision processes (as the authors point out). Such processes require thoughtful design and testing.
Choices about how to increase supply chain resilience have strategic implications beyond cost, quality, or differentiation — the suggested medium-term strategies can affect key How to Win factors such as order windows, delivery capabilities, product range, production scheduling flexibility, local production, and more. Strategies to improve resilience in the face of volatile trading conditions need to be consistent with the business strategy; and ideally, to enable it.
Finally, companies with manufacturing footprints that span multiple trading regions have a powerful resilience strategy available to them: crafting their production footprint into a manufacturing network. By manufacturing some components in more than one region, companies can improve their resilience to volatility in the costs of labor; materials; shipping; tariffs & trade restrictions; exchange rates; natural disasters; wars; and energy. Such a network can flex to accommodate changing conditions, maintaining production and reducing the impact of costs and disruptions. Fully employing such a network requires some degree of modularity in product design, and the ability to ensure that modules produced at different sites can be successfully assembled in the region of sale; the greater the design modularity, the greater the opportunity. 
We designed such a network with a global business unit at John Deere. Engineering was already modularizing product designs (for design efficiencies), and leadership wanted to explore the implications for manufacturing strategy. The resulting production network design showed substantial savings on total production cost (across several demand and cost scenarios), as well as increasing resilience to shocks. Yet, illustrating the cross-functional requirements of such strategies, implementation was slowed by challenges in configuring the ERP to handle the flexing of the network (i.e., shifting production volumes of modules between factories).
For decades, supply chain and manufacturing strategy has been dominated by a single consideration: cost. But in a more volatile global trade environment, manufacturers need to leverage the strategic dimensions of manufacturing strategy to adapt.