Ten years ago, the typical supply chain for manufacturing companies was domestic. Today—thanks to the migration of manufacturing to China and other lower-cost countries—it’s just as likely to be global.

I’ve been in logistics for more than 20 years. In that time, I’ve learned that some degree of change goes with the territory. However, I can honestly say that thanks to globalization, the past decade has included the most transition—and some of the most pronounced industry-wide changes of heart—I’ve ever seen.

Here are just a few of the reasons why this is no longer your father’s—or even your older brother’s—supply chain.

Adding some buffer to Just-in-Time

Back when many manufacturers’ supply chains spanned no more than a few hundred miles, it wasn’t unusual for automotive OEMs and other manufacturers to keep a mere day or two of safety stock on hand.

After all, many of their lead times were measured in hours. Most of their transportation providers were known quantities. And, the routes and infrastructure they used were highly familiar and time-tested.

Today, that kind of lean inventory is a luxury most companies can’t afford, because timely deliveries from global sources depend upon a far wider variety of factors that a manufacturer can’t always predict or control.

As a result, many companies now opt to keep several weeks rather than several days of inventory on hand at any given time. As a corollary, they’re also less inclined to see warehousing as a sign of slack in the supply chain—as it was regarded by many in the late ‘90s—and more inclined to view it as a strategic way to offset supply chain volatility.

Heightened interest in Vendor-Managed Inventory

Due to increased inventory levels—and the increased length of time products spend in transit—many companies have seen their inventory carrying costs rise. Hence they’ve started to take more of an interest in vendor-managed inventory, a financial and demand planning strategy that’s traditionally been used most by the electronic and retailing industries.

With VMI, companies don’t take ownership of a product until a point very near the tail end of the supply chain. In the meantime, all the coordination and financial obligation for the product is handled by a vendor or collection of vendors.

There’s no question that VMI can save a company stress and headaches or that it can effectively be deployed as a working capital tool.

However, companies must be very careful to ensure that they’re not inadvertently adding to their costs by delegating their inventory to a company with a less attractive weighted cost of capital. They also should be careful not to overburden their suppliers with excessively long cash demands, because even though suppliers might be willing to take on VMI responsibility in order to get new business, they may not fathom the depth of financial demands VMI can have on their cash flow.

Many contingency plans now include (or should include) a budget for airfreight

Airfreight historically has been the least-used mode of transportation in the global supply chain because of its higher expense. However, events such as the 2004 peak season congestion have demonstrated that there are times when modal flexibility can be very advantageous. Just as important, there are occasions when speed is far more important than transportation cost, especially if the lack of parts is going to shut down a production line.

Just as it’s unrealistic for any competent company to operate without a set of supply chain contingency plans, it is inadvisable for most companies not to budget for the use of at least some airfreight in contingency situations.

A different take on 3PLs

It seems fitting to conclude with a look at changes in the use of logistics outsourcing.

Whereas fewer than half of large companies outsourced their logistics in the early ‘90s, now that number is closer to 80 percent according to one major industry study. And, based on the kinds of Requests For Proposal crossing our threshold, many companies seem to be taking the outsourcing plunge specifically to support new global initiatives.

The dynamic of the 3PL relationship seems to have shifted.

Ten years ago, when the 3PL that companies were looking for was primarily for domestic logistics, companies were inclined to base much of their choice on cost and service—and sometimes to fall into the trap of not using their 3PL as strategically as they could. Today, companies looking for a global 3PL are just as likely to value factors such as experience, knowledge and relationships in the market and to rely on the 3PL they choose as a true partner, not just another vendor.

In that respect, it’s amazing what a difference a decade can make!