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Supply Chains Need to Be Simple and Complex

Global supply chains are becoming increasingly complicated. But they also need to respond to demands by customers for simplicity. Padman Ramankutty, chief executive officer of Intrigo Systems Inc., explains the apparent paradox.

Supply Chains Need to Be Simple and Complex

Supply chains are becoming more complex, says Ramankutty, even as users call for greater simplicity. “That conundrum is not going to change.” Companies need to deal with the underlying complexity of supply chains, while offering users and planners an easier model with which to work.

Both the demand and supply sides are experiencing disintermediation, he says. Products are being built in multiple locations, as companies search for low-cost countries that can meet demanding production targets. The customer side, meanwhile, is experiencing greater complexity as a result of affiliated marketing efforts and the presence of the internet as a key sales channel.

Suppliers are finding it increasingly difficult to cope with changes on the demand side. The fragmentation of the demand stream, coupled with the popularity of outsourcing on the supply side, creates new challenges for those who are responsible for balance the two ends.

Planning becomes more granular as product lifecycles shrink. “You have to drill down to tiny details,” says Ramankutty. The solution lies in a careful balancing of information technology and human decision-making.

Cost, meanwhile, hasn’t disappeared as a key concern for all companies. “It’s always going to be a challenge,” says Ramankutty. The need to control costs leads to greater risks on the inventory side, raising the possibility that suppliers won’t have product on hand to meet unexpected demand. Companies need to respond with a sales and operations planning process that includes both monthly and weekly cadences, embracing both planning and execution.

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Keywords: supply chain, supply chain management, supply chain training, supply chain planning, supply management, inventory management, inventory control, retail supply chain, sourcing solutions, supply chain risk management

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