@ Supply Chain Management


Creating the Optimal Supply Chain – Review (You Can’t Manage What You Can’t Measure’: Maximizing Supply Chain Value)

Earlier last week, I linked to a special report published by experts from BCG and Wharton regarding the topic – Creating the Optimal Supply Chain. I want to get this week off to an early start because I know that this week is crunch time at work.
The report is structured under four main topics namely,

‘You Can’t Manage What You Can’t Measure’: Maximizing Supply Chain Value
Avoiding the Cost of Inefficiency: Coordination and Collaboration in
Supply Chain Management
Flexibility in the Face of Disaster: Managing the Risk of Supply Chain Disruption
Supply Chain Enterprise Systems: The Silver Bullet?

So I dug into the report accordingly. Let’s take it a section at a time.
‘You Can’t Manage What You Can’t Measure’: Maximizing Supply Chain Value
So who hasn’t heard of Dell? Or Walmart?

In the face of increasing complexity in global supply chains, more companies are realizing that supply chain management (SCM) is a mission-critical element, and no longer simply the domain of the warehouse manager or logistics director.

Alright, that’s a little unfair because everybody needs a lead in into a piece and its no good to spring on that salient fact. But the fact of the matter is that the lead-in is a poor one at that. The critical nature of the supply chain in the business model that Dell uses or even that of Walmart is the stuff of legend now – we’ve come a long way from the notion that Supply Chain Management is the purview of a warehouse manager or logistics director alone even if some firms insist on operating that way today.
However, in the light of current business trends, the report states

“The major trends in business right now – low-cost country sourcing, outsourcing, customization, globalization and more – all create tremendous complexities in a supply chain,” says Steve Matthesen, vice president and global leader for supply chain at BCG. “In most cases, however, companies have not changed how they manage this critical part of the business.”

But for a moment consider where we came from. The above business trend is a business created trend or what I mean is that outsourcing and offshoring as methods of procurement or manufacturing were created by the business world for the business world. In all truth, the increase in supply chain complexity was a trade-off, whether recognized or not, for the lower costs of production or procurement. Offshoring and outsourcing will generally tend to increase lead times and inventory levels across the supply chain and this is precisely what companies that chose to outsource or offshore need to be aware off.

Matthesen further notes that there are three major factors that have dramatically increased the stress on supply chains. My comments follow each specific stress area:

Category: Supply Chain Management


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October 2006