“Many global supply chains are not equipped to
cope with the world we are entering. Most were engineered, some brilliantly, to
manage stable, high-volume production by capitalizing on labor-arbitrage
opportunities available in China and other low-cost countries.”
-McKinsey Report
These words exactly portray the current status
of supply chain systems across the world since the modern corporations are more
dependent upon the economic and demographic differences among geographically
distributed regions. It is quite blatant that this imbalance leverage is smoothly
losing its context because of the rise of the emerging economies. Organizations
with forethought are handling the situation in two possible ways – splitting their
chains into smaller and more dynamic units and the other way is by
restructuring the existent supply chains to forecast and handle a range of
possible scenarios. Though both have their pros and cons based upon the
business context the former is gaining prominence because it has the stronger
potential to cater well to the challenges that the supply chain systems of the
world are facing – complexity and uncertainty.
The increase in the number of supply chain
systems raises the demand for better coordination of the various networks thus
created. This only makes senses because of the factors that we saw above and
the ever rising customer demand and shortening product cycles both of which
demand faster responsive rates. Though the concept of data aggregation and
coordination with strategic partners is quite obvious for the industry, the execution
of the plan has lacked depth and incisiveness.
“Coordination is
managing dependencies between activities”
-MIT Journal
The process of coordination has the following
dimensions of information aggregation, process coordination and sequencing and
standardization. Each of these dimensions need a definition based on the
organizational structure. Technological facilities like Electronic Data
Interchange (EDI) are playing a key role in the development of innovative
supply chain networks.
For example,
companies like Cisco save about 12% of their net income by connecting its
customers and suppliers to an e-Hub through which it achieves forecast sharing,
order and component availability communication. Similarly, Dell has achieved revenue
gains through supply chain integration addressing its cost and service level
challenges.
The current
state of supply chain networks is one of the information age. It is just based
on the information shared but not the intelligence that could be gained from
it. Further, collaboration and optimization of the networks is at a very
rudimentary level and its implementation intensity reduces as the number of
units that are involved in the process. Logistics and information systems
should assume lead roles rather than being adjunct third party facilitated operation
which is what they are now in majority of the organizations. To tackle these
statuses and enhance them we might need to think of cross-functional training,
some coordinating frameworks and reduced product cycles. Once we set ourselves
in this mode other aspects like selection of network partners and the potential
realization of benefits could be derived from them. Such an approach would be
again information based but at a higher intelligence level. But the problem
with the current systems is though we what is in place what is required we do
not see an urge to run up the hill and fill the gap despite their obvious
proposition.
Why do not
we have numerous improvised and diversified supply chain network models from
which every organization could choose from? Could such definitions by
associations within every industry help them grow their networks right from the
start? Can the rise of technology despite its redundancy within selected
sections of supply chain be used to generate and customize these models (via new
supply chain software tools, big data storage, Hadoop processing, etc.)?
References and Readings:
http://relooney.fatcow.com/0_New_3551.pdf
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.