Tuesday, September 25, 2012

Catch 22

From the readings this week, there were two components of supply chain networks that stuck out to me. The first was that SC networks are complicated and generally involve a great deal of effort to research, plan and implement. For example, it took the Center for Disease Control five years to redesign and implement their new vaccine delivery method.[1] Second was that SC networks have become increasingly exposed to volatility in the global system. In the New York Times article, labor costs in China are rising as low end manufacturing positions become less desirable, carrying implications for supply chains that have been built around low cost of labor.[2] With these two, seemingly conflicting realities of modern day supply chains (complicated, engrained systems versus volatile supply chain components), how can managers make it work? 

One method supply chain managers might assume would be helpful in tackling this problem is what we examined in last week's lecture: lean manufacturing. The key component in lean manufacturing, as defined by Taiichi Ohno of the Toyota Production System, is to cut down as much time as possible from the moment a product begins its manufacturing journey until it reaches the customer.[3] It seems entirely plausible that less waste might make it easier to adjust or manipulate processes based on the global environment.

However, as Martin Christopher of the Cranfield School of Management explains in his article, "The Agile Supply Chain: Competing in Volatile Markets", lean manufacturing "works best in high volume, low variety and predictable environments".[4] What one would actually want is agility in the supply chain network. And while there are components of lean that are helpful in an agile supply chain, many lean systems are not agile. Christopher defines agility as "the ability of an organization to respond rapidly to changes in demand both in terms of volume and variety".[5] 

Supply Chain digest editor noted that "supply chain flexibility is more important than ever".[6] However, in our rapidly changing and interconnected world, there are different ideas as to how to get there. Some of these are explored in the Global Commerce Initiative, Future Supply Chains.[7] But how would you solve this problem? Information sharing? Collaborative storage and delivery? Continual analysis? No more outsourcing? Strategic outsourcing? 

[1] Copeland, Michael V. "Smarter Medicine: How the U.S. Centers for Disease Control and Prevention revolutionized the way vaccines are delivered."
[2] Barboza, David. "Supply Chain for iPhone Highlights Costs in China." The New York Times 5 July 2010.
[3] Zak, Tim. "Lean Manufacturing and Total Quality Management." Introduction to Supply Chain Management and Systems. Carnegie Mellon University. Hamburg Hall, Pittsburgh. 18 Sept. 2012. Class lecture.
[4] Christopher, Martin. "The Agile Supply Chain: Competing in Volatile Markets." Web. 25 Sept. 2012.
[5] Ibid.
[6] "How to Build a Flexible Supply Chain Network." Supply Chain Digest. N.p., 8 Mar. 2006. Web. 25 Sept. 2012. http://www.scdigest.com/assets/newsviews/06-03-08-1.cfm>.
[7] Global Commerce Initiative. "Future Supply Chain 2016." May 2008.

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