Expert Insight: Guest Contribution
By Manohar K. Venkatagiri
Date: April 20, 2009

Managing Supply Chain Complexity and Sustained Differentiation

 

Industry Leadership Achieved by Creation of Insight-Driven Enterprises; Risk Management and Governance Practices

Over the past two decades, supply chain operations have become increasingly complex because of access to new markets, adoption of global sourcing/outsourcing strategies and increasing integration of global supply chains. To manage the increased complexity in global supply chains, there has been significant investment in information technology assets, which has delivered benefits in resource productivity, increased supply chain visibility and powerful decision making capabilities. Such large-scale transformation in the supply chain may be irreversible in the short term, but there is a need to see the impact of this transformation in a balanced manner so that associated changes in structure and processes are deployed judiciously.

Such large-scale transformation also means that enterprises need new capabilities to manage the complexity and fully exploit the opportunities that are presented. There are three key aspects of supply chain management capability that need particular emphasis in the context of managing supply chain complexity and sustained differentiation.

Demand Side: Insight Driven Enterprise


Leaders in the industry are able to sustain their differentiation by focusing on building insight-driven strategies particularly on the demand side. Insights are critical for successful marketing strategies due to the evolution of multi-channel commerce, reduced product life cycles, rapid demographic changes, etc. Insights are generated based on advanced category analytics and translated into strategies - marketing, pricing and promotional apart from product life cycle management. What is also critical is that industry leaders are also able to successfully integrate these marketing strategies with the demand management strategies, thereby providing a vital link for efficient supply response. Therefore, complexity on the demand side is managed not just by deploying demand management capability, but by integrating the marketing strategies and supply response through better process integration.


Supply Side: Manage Supply Chain Risk


On the supply side, the complexity arises from the way supply networks are designed and their ability to respond to demand. Supply chain risk management has to assume increasing significance on the executive mind considering a number of strategic choices made by enterprises over a period of time.

  • Supply lead time has increased due to far-east sourcing and if it’s coupled with the lean inventory strategies, the supply risk is compounded
  • Increased outsourcing means that there is increased dependency on partners to deliver consistently against promise in a reliable manner
  • Outsourcing also means that there is an associated risk with losing visibility into downstream supply chain and the skills/knowledge necessary to effectively respond to downstream supply chain issues
  • Increased uncertainty in economic factors can have disruptive effects on the supply chain the way they are designed now, as was evident during high oil prices, turmoil in financial sector etc.

All these factors mean that new capabilities are required to measure, monitor and respond to supply chain risks in an effective manner. Such capabilities include increased focus on building a supply network that is flexible, improved visibility in supply chain beyond enterprise boundaries, ability to analyze “what-if” scenarios and deploying response strategies to effectively counter the risks. The organization capability has to go beyond supply chain governance to defining a robust framework for responding to supply chain risks.

Supply Chain Governance


The current design of extended supply chain networks has evolved primarily to reduce supply chain costs. Therefore, supply chain processes were designed to optimize inventory and service levels with a given supply chain network. These supply chain processes are very tightly integrated, and failure in one downstream process can have a cascading impact on the entire supply chain operations. Consequently, there is a need to manage the integration between these processes through a robust governance structure. Sales & Operations Planning (S&OP) has evolved as an efficient mechanism to ensure robust supply chain governance and integrate demand and supply side processes to deliver the supply chain goals.

In summary, management capabilities presently deployed in enterprises are based on a reliable and extended global supply network to meet customer demand. However, leadership in the industry will be achieved by successful creation of ‘Insight driven enterprises’ for reduced time to market, while managing supply risks better through robust risk management and governance practices.


Agree or disgree with with our guest contributor's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.


Send an Email
profile About the Author

Manohar Venkatagiri
Principal Consultant,
Enterprise Solutions - Supply Chain Management,

Infosys Technologies Ltd.

Manohar manages the supply chain management practice for Europe. The practice focuses in providing services and solution for multi-channel fulfillment, supply chain planning and execution, and asset and procurement management excellence.

Manohar has more than 14 years of experience in supply chain operations, consulting, and client engagements across industries.

He blogs on supply chain management issues that drive operational excellence and enterprise performance.

Manohar shares his thought leadership insights on SCM at Infosys’ Supply Chain Management blog: www.infosys.com/supply-chain

He can be contacted at: Manoharkumar_v@infosys.com

 

Venkatagiri Says:


There are three key aspects of supply chain management capability that need particular emphasis in the context of managing supply chain complexity and sustained differentiation.


What Do You Say?
Click Here to Send Us
Your Comments
views
 
profile Related Blogs
Demand Forecasting Maturity Curve

Supply Chain Transformation - The Need for Speed

"Will the Real Digital Twin Please Stand Up?"

INCOTERMS 2020: Is Your Organization Ready?

Is Your Supply Chain Transparent?

Streamlining the Movement of Goods in the EU

Blockchain: Surgere's New Supply Chain Tool

Surgere Creates Visibility Across the Supply Chain for Companies Like Honda

Dynamically Routing Your Fleet and For-Hire Capacity

Cargo Threats Need Closer Attention

<< Previous | Next >>

See all posts
.