The agility gap, says Margolis, “is what we see every day in working with global manufacturers – between their ability to react to dynamic markets and their systems, processes and organizations.” Companies today need to act quickly to changes in their customer base and markets, he says, but many are blocked from doing so by their own internal structures.
A host of recent factors – the earthquake and tsunami in Japan, the volcanic eruption in Iceland, various economic shocks and the rise of emerging markets – is making it even more crucial that businesses be able to adjust rapidly to the unexpected. “In today’s world,” says Margolis, “we’re more interconnected than ever before.” An event in one part of the globe can have serious ramifications in all regions.
In response, companies are working hard to improve the flexibility of their supply chains. They need to understand the alternatives when disruptions occur, and they need to integrate their commercial and operational sides. That said, they often take on too large or ambitious an effort to cure their shortcomings. “We recommend they take things on a step-by-step basis,” Margolis says.
He cites Canon as an example of a company that has successfully embraced supply-chain agility. Its European operations were historically structured in a top-down fashion, with a rigid system for allocating products among countries within the region. Today, Canon is pooling information across regions, freely moving parts and product around to achieve the proper balance between supply and demand. “It has enabled them to do a much better job of serving the customer,” says Margolis.
Companies today face three main challenges, he says: utilizing information technology effectively, building flexibility into their supply chains and ensuring that collaboration among partners “is constantly happening.”
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Keywords: supply chain, supply chain management, supply chain risk management, retail supply chain, sourcing solutions, supply chain planning, inventory management, inventory control, logistics management