12 February 2020
For many companies, cost-efficiency is an enticing end goal for its supply chain. Unfortunately, the weakness of this approach is a dangerous lack of supply chain flexibility.
The ability to respond to volume changes due to things as emerging economies, natural disasters and shifts in local and global economies has become one of the top supply chain priorities. Furthermore, competitive factors such as speed-to-delivery and customer experience is increasing the complexity of supply chain management.
Together with an increasing amount of scrutiny from media, customers and suppliers have made flexible and visible supply chains vital for company growth and value creation.
The three main ingredients for a successfully flexible supply chain is the following: the elevation of supply chain leaders, the integration with business units and suppliers, and finally collaboration with suppliers.
The elevation of supply chain leaders to C-suite levels is already underway in many companies. As more and more of a company’s growth is tied to the scalability of their supply chain, people with the necessary skills and operations experience naturally rise to the roles of leadership. But a strategic leader is not enough. Input and expertise of managers from supply chain functions such as planning, sourcing, manufacturing, logistics is needed to understand specific operations, goals and deadlines.
A well-functioning and well-led supply chain are not enough for building flexibility. Integration of the supply chain organization with other functions and across the extended supply chain is the bedrock upon which flexibility can be built. By having an integrated organization, a company may map out supply chain processes as services and products are developed, instead of needing to wait until after the fact. By identifying key strategic and core suppliers that are integral to business strategy and operations and creating strong collaborative relationships with them companies can identify and react to changes in capabilities risks in the supply chain.
This type of close collaboration requires a high level of trust between companies, as well as more open sharing of tactical and strategic information. By segmenting suppliers into different categories generates a valuable transparency. This is essential to anticipate not only changes in the supply chain, but also deficiencies in product manufacturing and workplace conditions.
In the end, any CEO or manager seeking to create a flexible supply chain needs to tackle the subject from a holistic perspective. Decisionmakers must identify ways for flexibility to be integrated into the business culture. Both internally as well as towards suppliers and customers.