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Four Supply Chain Issues Critical to the Success of Your Business

Written By: Bob Eastman
Published On: August 30 2013

This has been as exciting a year in supply chain as any in recent memory. Enterprises are continuing to adjust to the still-uncertain economic picture, while supply chain management (SCM) vendors are coming out with new innovations such as analytics and predictive analytics, and leveraging other technologies such as the cloud and mobility to bring new functionality to their solutions. And as if things were not interesting enough, merger and acquisition activity in the supply chain space continues to abound. In the midst of this, as well as the usual ongoing supply chain dynamics, there are four major supply chain issues that are critical to the success of supply chain–focused businesses: supply chain complexity; the real-time supply chain; risk management; and supply chain execution and logistics.

Let’s take a closer look at these four supply chain issues.

Increasing complexity of the supply chain

Supply chains are getting ever more complex. Enterprises have lengthened their supply chains, added more parties and partners to the chain, compressed times within the chain, added more technology and technology linkages, and put more pressure up and down the chain to deliver more goods and services faster.

At the same time, companies are responding to changing economic conditions, reacting to new and different business models and strategies, adjusting to new and changing expectations of customers, looking at greater competition, and, in many cases, more regulatory activity.

The increasing pace of business and business change and the increasing complexity of supply chains is bringing the latter topic to the forefront. How should businesses address supply chain complexity? Getting rid of complexity is not the answer. There is good, as well as bad, complexity, and trying to rid an enterprise of all complexity is quite a futile task. Enterprises can, and should, however, examine the complexity of their supply chains to assess where complexity is creating or contributing to value, and where complexity is impairing the creation and delivery of value.

The real-time supply chain

If you think you have been hearing about the real-time supply chain and the accelerating cycle of planning for quite a long time, it is because you have. People have been talking about this, from one perspective or another, for more than 10–15 years. More focus is being put on this topic now, thanks to the tough economic times that we live in, the availability of big data, and better analytics, among other things. With the increasing availability of Internet bandwidth and the pervasiveness of power in the hands of more people, business is being done faster and more frequently.

So, the real-time supply chain means that enterprises are able to mitigate uncertainty by sampling demand signals more frequently and more accurately; and reacting and responding to supply chain changes more quickly, more effectively, and therefore, more cost effectively. Many people are talking about this idea of clock speed; however, this term is easier to conceive than to articulate. The real-time supply chain delivers many benefits to both enterprises and enterprises’ customers—but not without its own set of pressures and costs.

Risk management

Risk management is not the hot topic that it was 5–6 years ago. Yet it is hard to argue that overall business risk has declined. There seems to be so much risk around us that too many enterprises do not have the time or the budget to manage it. Instead, risk has been displaced in focus by more urgent revenue- and cost-focused priorities.

Risks to the supply chain come in many forms, however. Weather- and climate-related supply chain disruptions abound, cyber crime is on the rise, and social media exposes many enterprises to a whole set of other risks, just to name a few. Enterprises that ignore or dismiss supply chain risk can suffer unanticipated consequences, ranging from damage to business infrastructure to disruption to the flow of business and revenue loss, to damaged customer and supplier relationships, and/or reputation.  So, ignoring supply chain risk may be one of the biggest risks of all. It is therefore time to put more focus on supply chain risk and on risk management.

Supply chain execution and logistics

What discussion on supply chain would be complete without talking about the ‘last mile’ of supply chain? At a time when consumer expectations are higher than ever, and even the slightest slip-up is a “#FAIL” (in twitterspeak), supply chain execution and logistics are more important than ever.

But supply chain execution and logistics too seldom get the attention they deserve. Given the increasing complexity in the supply chain, the compression of the supply chain, and the ever presence of risk in every step of the supply chain, among other things, supply chain execution takes on increasing importance. With consumer expectations going up, not down, an enterprise’s logistics and supply chain execution processes are what deliver all of the value created by the enterprise to the consumer.

All of the investment in perfecting every step in the supply chain can be undone by a lack of focus on the supply chain execution and logistics processes that ensure that your product or services get to the customer in a quick, secure, cost-efficient manner. At a time when some studies indicate that logistics performance is declining rather than increasing, only greater attention from enterprises will ensure that you can meet increasing customer expectations. All of the good work that has been done to design, source, and manufacture or produce a good or service can be undone by lack of execution in delivering that good or service to the customer. With the increasing focus on the “customer experience,” customers consider their experience as beginning with the placing of their order and concluding with the successful and satisfactory receipt of that good or service.

Conclusion

If you’re a manufacturer, distributor, or other supply chain–focused enterprise, then these four major issues play an important role in the success of your business. Look to the TEC 2013 Supply Chain Management (SCM) Buyer’s Guide, available here in late September, for an in-depth look at these four issues, and how the use of software offerings and next-gen technologies can help you accelerate your supply chain processes and gain a competitive advantage.
 
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