Occupying a prominent place on my business bookshelf is “Supercharging Supply Chains,” an influential 1998 work by a quarter of authors, those being my friends by Gene Tyndall and Christopher Gopal, with also Wolfgang Partsch, and John Kamauff.
In great summary, that book explained the meaning and benefits of the end-to-end supply chain in very easy to understand terms, and it remains one of the classics of supply chain thinking.
In 2023, three of the four (Tyndall, Gopal, Partsch), plus Eleftherios Iakovou, produced a sequel of sorts titled “Breakthrough Supply Chains.”
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The first chapter also contains several references to the “financialization” of supply chains, having to do with focus on lowest-cost production, just-in-time strategies, and other tactics to “engineer the balance sheet,
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For some reason, I failed to do a review at the time, but thought it might be time to amend that oversight after pulling it of my shelf last weekend and catching the sub-title: “How Companies and Nations Can Thrive and Prosper in an Uncertain World.”
Do we live in an uncertain world, both in terms of geopolitics and our supply chains? That’s putting it mildly. I was also very interested in how the book, written before Trump won a second presidency, and with it talks of heavy tariffs, an anti-global slant, and more, would be relevant in this new environment.
So let’s take a look.
The authors note it’s a new environment, coming out of a couple of years of significant supply chain disruptions and resulting in a heavy focus on greater resilience in supply chain. It also notes that as a result, there was already a change in thinking relative to global, with many companies adopting regional manufacturing strategies to get closer to the customer,
In a preface, the book says it is designed to address five key issues:
• The supply chains of yesterday, today and tomorrow
• Customer, demand and supply
• The supply chain enablers – things such as data, skill sets and metrics
• The new imperatives of residence and sustainability
• The way forward – how to achieve to achieve breakthrough results
That sounds pretty good.
But as a foundation, the first chapter answers a basic question: what is a supply chain? I am not sure the book’s answer breaks any new ground, but it does provide an outstanding primer on the topic. I will summarize below.
“The supply chain is about matching and reconciling demand and supply chain in a manner that minimizes risk, ensures liquidity, and maximizes profitability in a sustained fashion,” the book says.
I would say that’s a very good start.
The authors build off that foundation to add in the complexities of souring, distribution, and more, and note that of course it really is a network, not a linear chain.
In fact, the authors say that today’s supply chains are “complex, multitiered, and interconnected networks,” with many geographically diverse suppliers, multiple modes of transportation, complex channels of distribution and more.
A newer element of supply chain concern has to do with risk management and resilience, with supply chains facing a growing number of potential disruptions, from growing weather issues to the huge risk around cybersecurity.
The book also makes the point that not only is it competing supply chains at the business level but such supply chain competition is also found at the country-level as well. And that competition at both levels is occurring in an environment of increasing ‘VUCA” – volatility, uncertainty, complexity, and ambiguity.
The message: if you are not building a supply chain to thrive in a VUCA world you will fall behind.
And that involves in part the need to view the supply chain “from an end-to-end, holistic perspective across the entire network. Still, the authors note, for many the understanding of the process is akin to the metaphor of the six blind men describing an elephant based on what part of the animal they are touching.
Interestingly, the book cites one anonymous executive as saying that “the supply chain, along with sales, is the enterprise.”
The book briefly addresses some “myths” around supply chain. That includes:
• Supply chain and logistics are the same – not true, logistics is a subset of supply chain
• The supply chain is too big for one person to manage – that’s not true in most companies
• Supply chains are mostly about cost minimization – supply chain plays a key role for most in driving revenue growth
• AI and other technology will replace most humans in the supply chain – the authors are bullish on the on-going need for human decision-making
I say we’ll all see on that last one.
The first chapter also contains several references to the “financialization” of supply chains, having to do with focus on lowest-cost production, just-in-time strategies, and other tactics to “engineer the balance sheet,” which the authors view with some skepticism in today’s world.
All good stuff. Again, while much of this is standard stuff, it is delivered in a highly effective way and does a great job of setting the table for its recommendation for building a breakthrough supply chain.
I’ll be back to summarize that next week.
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