A lack of resilience, flexibility or "slack" in the supply chain leads to a brittleness that hampers the ability to respond effectively to inevitable problems or disasters, says Simon Ellis, director of the Supply Chain Strategies Practice at IDC Manufacturing Insights. By the same token, do we create unnecessarily complicated responses to these problems or to complexity?
Supply chain managers have historically concerned themselves with running a tight ship. Excess inventory or capacity was to be eliminated. "Sweat the assets" might have been the motto. But to use Ellis's word, a certain "brittleness" often results, and when a big event occurs, "you may find your supply chain running down."
So while there remains the need to manage for cost control, efficiency and risk, "Let's be more aware of where we have some flexibility, where we need to have some slack so that when things inevitably go wrong, we can be more resilient and not be shut down for six weeks or more."
Ellis speaks of complexity versus complication. The former is inherent in the supply chain. "We run a global supply network with long lead times, with lots of suppliers and customers, and that creates a level of complexity. You can't do a lot about that at the end of the day. How you respond to that complexity is where the complication comes in.
"How do we react to it? Do we create unnecessarily complicated business processes, unnecessarily complicated IT infrastructure - what are the things we do as a result of that complexity?"
The order of the day may be to simplify, but how? Clearly, processes have to be studied. More practical analytics programs may be needed. New technology? "You don't want to buy an application for the sake of a buying an application," Ellis says. "You buy something to solve a business problem and which has a good ROI."
Better planning and warehouse management systems are among the technology needs many companies have. "These are very useful to supply chain organizations. You have significant capability gaps if you don't have them."
To view this video interview in its entirety, click here.
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