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Complexity in supply-chain management rears its head in three distinct ways, says Karani: in the sheer number and variety of components, systems and people involved; in the interrelationships among them; and in the rate at which the picture is constantly changing. "The more components you add to the mix," he says, "the more you add complexity."
Complexity is not entirely a negative concept. "Good complexity improves performance," says Karani. "If things were simple, we'd all be making minimum wage, and everybody would be able to copy everybody else."
What's unique about a company or its product is what ultimately creates value for customers. In that respect, complexity can be a good thing. Bad complexity, by contrast, "destroys value, adds cost and harms the customer experience," says Karani. The trick for supply chain managers lies in knowing the difference between the two.
Karani lays out what he calls "the six P's" of complexity: periphery, covering regulations, terrorism and other issues beyond a company's control; planning, involving a company's unique identity and what it sells; people, focusing on human behavior and interactions; processes, arising from the orchestration and execution of core business processes; projects, aimed at such goals as delivering product on time and on budget; and products, raising basic questions about how to respond to changing customer demand.
Karani speaks also of the "total intelligence concept," which he defines as the ability to master the end-to-end supply chain, drawing on both manufacturing and general business data at all levels. Total intelligence embraces "everything I know about my market, competition, and what I need to do at the plant level to optimize [operations]. It's the best of both worlds."
Companies struggle with the question of which aspect of business to address first: people, process or technology. "At the heart of any change management is all three," says Karani. "It's the fusion of all those things."
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Keywords: supply chain, supply chain management, supply chain planning, inventory management, customer relationship management, logistics management, supply chain systems, supply chain risk management
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